-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FbzFJgp5bX97V89ByzuMGmwRLJr/jS0a6ZIAsvcvpSrYEYu4kH1GkS+SwnbV0719 C+KBrA43TTpQp83tP0n3AQ== 0000950135-04-005624.txt : 20080320 0000950135-04-005624.hdr.sgml : 20080320 20041210163812 ACCESSION NUMBER: 0000950135-04-005624 CONFORMED SUBMISSION TYPE: S-1 PUBLIC DOCUMENT COUNT: 29 FILED AS OF DATE: 20041210 DATE AS OF CHANGE: 20050211 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Benjamin Franklin Bancorp, M.H.C. CENTRAL INDEX KEY: 0001302176 STANDARD INDUSTRIAL CLASSIFICATION: SAVINGS INSTITUTION, FEDERALLY CHARTERED [6035] IRS NUMBER: 043336598 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-1 SEC ACT: 1933 Act SEC FILE NUMBER: 333-121154 FILM NUMBER: 041196787 BUSINESS ADDRESS: STREET 1: 58 MAIN STREET STREET 2: P.O. BOX 309 CITY: FRANKLIN STATE: MA ZIP: 02038 BUSINESS PHONE: (508) 528-7000 MAIL ADDRESS: STREET 1: 58 MAIN STREET STREET 2: P.O. BOX 309 CITY: FRANKLIN STATE: MA ZIP: 02038 FORMER COMPANY: FORMER CONFORMED NAME: Benjamin Franklin Bancorp, M.H.C. DATE OF NAME CHANGE: 20040901 S-1 1 b52576bfsv1.htm BENJAMIN FRANKLIN BANCORP, INC. sv1
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As filed with the Securities and Exchange Commission on December 10, 2004

Registration No. 333-            

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM S-1

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

Benjamin Franklin Bancorp, Inc.

(Exact name of registrant as specified in its charter)
         
Massachusetts   6712   04-3336598
(State or other jurisdiction   (Primary Standard Industrial   (I.R.S. Employer
of incorporation or organization)   Classification Code Number)   Identification Number)

58 Main Street
Franklin, Massachusetts 02038-0309
(508) 528-7000
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Thomas R. Venables
President and Chief Executive Officer
Benjamin Franklin Bancorp
58 Main Street
Franklin, Massachusetts 02038-0309
(508) 528-7000
(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:
     
Peter W. Coogan, Esq.   Eric Luse, Esq.
Carol Hempfling Pratt, Esq.   Marc P. Levy, Esq.
Foley Hoag llp   Luse Gorman Pomerenk & Schick P.C.
155 Seaport Boulevard   5335 Wisconsin Ave. N.W.
Boston, Massachusetts 02210   Washington, D.C. 20015
Telephone: (617) 832-1000   Telephone: (202) 274-2000
Telecopy: (617) 832-7000   Telecopy: (202) 362-2902

     Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective.

     If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. þ

     If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act of 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

     If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act of 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

     If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act of 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

     If delivery of the prospectus is expected to be made pursuant to Rule 434, check the following box. o

CALCULATION OF REGISTRATION FEE

                 
        Proposed Maximum   Proposed Maximum    
Title of Each Class of   Amount to be   Offering Price Per   Aggregate Offering   Amount of
Securities to be Registered
   Registered (1)
   Share
   Price (2)
   Registration Fee
Common Stock, no par value.
  7,012,500   $10   70,125,000   $8,885.00
Participation Interests
  (3)             (4)

(1)   Includes the maximum number of shares of Common Stock that may be issued in connection with this offering and shares of Common Stock to be contributed to the Benjamin Franklin Bank Charitable Foundation, a private foundation.

 

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(2)   Estimated solely for the purpose of determining the amount of the registration fee pursuant to Rule 457(o) under the Securities Act of 1933.

(3)   The securities of Benjamin Franklin Bancorp to be purchased by the Benjamin Franklin Bank 401(k) Plan are included in the amount shown for Common Stock.

(4)   No separate fee is required for the participation interests. In accordance with Rule 457(h) of the Securities Act of 1933, as amended, the registration fee has been calculated on the basis of the number of shares of Common Stock that may be purchased with the current assets of such plan.

     The registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

 

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PROSPECTUS

BENJAMIN FRANKLIN BANCORP, INC.
(Holding Company for Benjamin Franklin Bank)

[BFBC LOGO]

Up to 6,612,500 Shares of Common Stock

     Benjamin Franklin Bancorp, Inc., Franklin, Massachusetts, is offering shares of its common stock in connection with its conversion from its current form as a Massachusetts-chartered mutual holding company, known as Benjamin Franklin Bancorp, M.H.C., to a Massachusetts-chartered business corporation and stock holding company. Benjamin Franklin Bancorp now owns all of the common stock of Benjamin Franklin Bank and will continue to do so after the conversion. Currently, there are no outstanding shares of Benjamin Franklin Bancorp common stock. We have applied to have the common stock of Benjamin Franklin Bancorp quoted on the Nasdaq National Market under the symbol “BFBC.”

     At the same time as the conversion, Benjamin Franklin Bancorp will acquire Chart Bank of Waltham, Massachusetts, using $22,492,000 of the net proceeds of the offering, together with 2,401,575 newly issued shares of our common stock, assuming that the Chart Bank options are cashed out at the closing rather than being exercised by optionees prior to the closing.

     We are offering up to 5,750,000 shares of common stock for sale on a best efforts basis. We may sell up to 6,612,500 shares of common stock because of regulatory considerations, demand for the shares or positive changes in market conditions, without resoliciting subscribers. In addition, we will donate to a charitable foundation to be established by Benjamin Franklin Bank 8.0% of the number of shares we actually sell in the offering, up to a maximum of 400,000 shares. We must issue a minimum of 4,250,000 shares in the offering. If we do not receive orders for at least this minimum number of shares, then we may apply up to 2,082,500 unsubscribed shares toward the merger consideration to be paid to Chart Bank stockholders, but only in order to issue sufficient shares to achieve this minimum number. The contribution of the common stock to the Benjamin Franklin Bank Charitable Foundation will not be considered in determining whether the minimum number of shares of common stock, 4,250,000, has been sold in order to complete the offering.

     The minimum order size is 25 shares. The offering is expected to expire at 10:00 a.m., Massachusetts time, [date], 2005. We may extend this expiration date without notice to you until [date], 2005, unless the Massachusetts Commissioner of Banks approves a later date, which may not be beyond [date], 2005. Once submitted, orders are irrevocable unless the offering is terminated or is extended beyond [date], 2005 or the number of shares of common stock to be sold is increased to more than 6,612,500 shares or decreased to less than 4,250,000 shares. In any of these cases, subscribers will have the right to modify or rescind their purchase orders. Funds received during the offering will be held in a segregated account at Benjamin Franklin Bank and will earn interest at our passbook savings rate.

     Ryan Beck & Co., Inc. will assist us in selling our shares of common stock on a best efforts basis. As Ryan Beck & Co., Inc. is not underwriting the offering, it is not required to purchase any shares of the common stock that are being offered for sale. The purchase price is $10 per share. Purchasers will not pay a commission to purchase shares of common stock in the offering.

 

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Offering Summary
Price: $10 per share

                         
    Minimum
   Maximum
   Adjusted Maximum
Number of Shares
     4,250,000       5,750,000       6,612,500  
Gross Offering Proceeds
   $ 42,500,000     $ 57,500,000     $ 66,125,000  
Estimated Offering Expenses.
     1,553,850       1,691,370       1,770,720  
Estimated Net Proceeds
   $ 40,946,150     $ 55,808,630     $ 64,354,280  
Estimated Net Proceeds/Share
   $ 9.63     $ 9.71     $ 9.73  

THIS INVESTMENT INVOLVES A DEGREE OF RISK, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
PLEASE READ “RISK FACTORS” BEGINNING ON PAGE [#].

THESE SECURITIES ARE NOT DEPOSITS OR ACCOUNTS AND ARE NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY. NONE OF THE SECURITIES AND EXCHANGE COMMISSION, THE MASSACHUSETTS COMMISSIONER OF BANKS NOR ANY STATE SECURITIES REGULATOR HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

RYAN BECK & CO., INC.

     For assistance, contact the Stock Information Center at [_________].

The date of this prospectus is [date], 2005

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(BENJAMIN FRANKLIN BANK’S AND BRANCH BANK’S)

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Financial Statements
        
    F-1  
    G-1  
 EX-1.1 Engagement Letter between Benjamin Franklin Bancorp and Ryan Beck & Co.
 EX-2.1 Plan of Conversion
 EX-2.2 Agreement & Plan of Merger among Benjamin Franklin Bancorp, M.H.C., Benjamin Franklin Savings Bank and Chart Bank
 EX-3.1 Articles of Organization of Benjamin Franklin Bancorp, Inc.
 EX-3.2 Bylaws of Benjamin Franklin Bancorp, Inc.
 EX-5.1 Form of Opinion of Foley Hoag LLP regarding legality of securities being registered
 EX-8.1 Form of Tax Opinion of Foley Hoag LLP
 EX-10.1.1 Form of Employment Agreement with Thomas R. Venables
 EX-10.1.2 Form of Employment Agreement with Claire S. Bean
 EX-10.1.3 Form of Employment Agreement with Stephen F. Banks
 EX-10.2 Form of Change in Control Agreement with six other Executive Officers
 EX-10.3 Form of Benjamin Frankin Bank Benefit Restoration Plan
 EX-10.4.1 Benjamin Franklin Bank Salary Continuation Agreement with Thomas R. Venables
 EX-10.4.2 Benjamin Franklin Bank Supplemental Executive Retirement Plan with Stephen F. Banks
 EX-10.5 Benjamin Franklin Bancorp Director Fee Continuation Plan
 EX-10.6 Benjamin Franklin Bancorp Employee Salary Continuation Plan
 EX-10.7.1 Payments and Waiver Agreement with Richard E. Bolton, Jr.
 EX-10.7.2 Consulting and Noncompetition Agreement with Richard E. Bolton, Jr.
 EX-10.8 Special Termination Agreement between Alfred F. Odoardi and Chart
 EX-21 Subsidiaries of Registrant
 EX-23.3 Consent of Wolf & Company, P.C. with respect to Benjamin Franklin Bancorp
 EX-23.4 Consent of Wolf & Company, P.C. with respect to Chart Bank
 EX-23.5 Consent of RP Financial, LC.
 EX-99.1 Appraisal Agreement between Benjamin Franklin Bancorp and RP Financial, LC.
 EX-99.3 Business Plan Agreement between Benjamin Franklin Bancorp and RP Financial, LC.
 EX-99.8 Consents of Richard E. Bolton, Jr., Paul E. Capasso, Jonathan A. Haynes, Daniel F. O'Brien, Donald P. Quinn, and Neil E. Todreas, to be identified as proposed directors

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SUMMARY

     The following summary explains the significant aspects of the conversion and the offering. It may not contain all the information that is important to you. For additional information, you should read this entire document carefully, including the consolidated financial statements and the notes to the consolidated financial statements of Benjamin Franklin Bancorp and Chart Bank.

The Companies

     Benjamin Franklin Bancorp. Benjamin Franklin Bancorp, M.H.C. is the Massachusetts-chartered mutual holding company of Benjamin Franklin Bank, a Massachusetts-chartered savings bank. Upon the conversion, Benjamin Franklin Bancorp, M.H.C. will exchange its mutual holding company charter for the charter of a Massachusetts business corporation and will change its name to Benjamin Franklin Bancorp, Inc. Benjamin Franklin Bancorp’s principal activity is, and after the conversion will continue to be, the ownership of 100.0% of the outstanding capital stock of Benjamin Franklin Bank.

     Our executive offices are located at 58 Main Street, Franklin, Massachusetts 02038-0309. Our telephone number at this address is (508) 528-7000.

     Benjamin Franklin Bank. Benjamin Franklin Bank is a full-service, community-oriented financial institution offering products and services to individuals, families and businesses through six offices located in Norfolk and Worcester Counties in Massachusetts, and specifically in the towns of Franklin, Foxboro, Bellingham, Milford, and Medfield. Benjamin Franklin Bank was originally organized as a Massachusetts state-chartered mutual savings bank in 1871, and reorganized into the mutual holding company structure and became the wholly-owned subsidiary of Benjamin Franklin Bancorp in 1996. At September 30, 2004, Benjamin Franklin Bank had total assets of $517.1 million and total deposits of $402.0 million. Pursuant to our merger agreement with Chart Bank, Chart Bank will merge into and become a part of Benjamin Franklin Bank immediately following the completion of the conversion.

     Benjamin Franklin Bank’s business consists primarily of making loans to its customers, including residential mortgages, commercial real estate loans, construction loans, commercial business loans and consumer loans, and investing in a variety of investment and mortgage-backed securities. Benjamin Franklin Bank funds these lending and investment activities with deposits from the general public, funds generated from operations and selected borrowings.

     Chart Bank. Chart Bank, A Cooperative Bank, is a Massachusetts cooperative bank that was formed in 1985. Chart Bank primarily conducts its business from two banking offices in Waltham, Massachusetts and one banking office in Newton, Massachusetts. Chart Bank is engaged principally in the business of investing in various types of residential and commercial mortgages, consumer and commercial loans, and investment securities, funded primarily with deposits from the general public and Federal Home Loan Bank of Boston borrowings. Chart Bank offers a wide variety of deposit and loan products and services to individual and commercial customers. Additionally, Chart Bank, through its subsidiary, Creative Strategic Solutions, Inc., or CSSI, supplies cash to automatic teller machines, or ATMs, owned by independent service organizations and provides related cash management services to a nationwide customer base.

Our Business Strategy

     Since its inception, Benjamin Franklin Bank has maintained a community-focused orientation, through attention to superior levels of customer service coupled with a diverse product menu designed to meet the needs of individuals and businesses located in its market area. As a result of the conversion and

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simultaneous acquisition of Chart Bank, Benjamin Franklin Bank will be a larger, more geographically diverse and well-capitalized institution, with a management team and structure geared toward implementing operating strategies that build on these strengths and draw on the best of the business strategies currently being used at Benjamin Franklin Bank and Chart Bank. Important elements of the business strategy that we will be pursuing going forward can be summarized as follows:

1.   Increase Loan Assets And Change Loan Mix. In addition to concentrating on increasing the loan portfolio generally, we expect to continue our focus in particular on increasing originations of commercial real estate and commercial business loans, with a goal of increasing these types of loans as a proportion of our loan portfolio from the September 30, 2004 level of 22.3% of total loans. Our acquisition of Chart Bank is an important step in the direction of achieving this goal; at September 30, 2004 on a pro forma basis including Chart Bank’s loan portfolio, commercial real estate and commercial business loans would have represented 33.9% of total loans. We also expect to hire additional lending personnel, and intend to establish a commercial lending department, headed by Chart Bank’s senior commercial lender, that will focus specifically on the origination of commercial business loans and related commercial deposit opportunities.
 
2.   Maintain Asset Quality. We will continue to focus on managing credit risk to maintain our favorable asset quality. While focusing on expanding our lending activities, and our commercial lending activities in particular, we will continue to emphasize what we believe are prudent underwriting standards, as well as diligent monitoring and collection efforts and maintaining adequate loan loss reserves.
 
3.   Geographic Expansion. We intend to continue the geographic expansion of our franchise represented by the Chart Bank acquisition. We intend to open new branch offices, to the extent our financial resources permit, in communities located between the Benjamin Franklin Bank and Chart Bank franchises as well as in other communities contiguous to those currently served by Benjamin Franklin Bank. While the precise number of new branches and related timing has not yet been determined, we consider it likely that we will establish at least one new branch in each of the years 2005 through 2007. We will also remain open to the possibility of further expansion through whole-bank and branch acquisitions, as opportunities arise.
 
4.   Increase Deposit Market Share in the Markets We Serve. Retail deposits are our primary source of funds for our lending and investing activities. By offering a variety of deposit products and superior customer service, we will seek to retain and expand existing customer relationships as well as to attract new deposit customers. Personalized service and flexibility with regard to customer needs will continue to be augmented with a variety of delivery channels to maximize customer convenience. These include extended branch hours, ATMs, Internet banking, automated bill payment and telephone banking. Through our continued focus on these deposit-gathering efforts in existing branch locations, coupled with our plans for geographic expansion, we expect to increase the overall level of deposits and our market share in the markets we serve.
 
5.   Increase Non-interest Income. Traditionally, Benjamin Franklin Bank’s profits have relied heavily on the net interest income derived from its lending and investing activities. Over the past several years, management has initiated activities to decrease that reliance on net interest income, by offering fee-based products such as investment advisory services and insurance. Going forward, Benjamin Franklin Bank will continue to pursue initiatives to increase non-interest income, including the potential expansion of the activities of Chart Bank’s subsidiary, CSSI, which supplies cash to automatic teller machines, or ATMs, owned by independent service organizations and provides related cash management services to a nationwide customer base.

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6.   Improve Operating Efficiency And Cost Control. While our operating efficiency has improved over the past two years, with the ratio of non-interest expense to average total assets declining from 2.76% in 2002 to 2.73% in 2003, we believe there is potential for further improvement. We recognize that our growth strategies and our public company status will require greater investments in personnel, marketing, premises and equipment, and these investments will have a negative impact on our expense ratios over the short term. However, we will continue our efforts to monitor and control costs throughout the organization, and over the long term, as our assets grow, we expect our ratio of non-interest expense to total average assets to decline. The increased scale that will result from the acquisition of Chart Bank is one important factor in achieving this goal.

Reasons for the Conversion

     The primary reasons for converting from the mutual form (meaning no stockholders) to the stock form (100% owned by public stockholders) and raising additional capital through the stock offering are:

•   to provide us with the capital and the form of consideration necessary to acquire Chart Bank, as discussed below;
 
•   to support internal growth through lending in the communities we serve;
 
•   to enhance existing products and services and support the development of new products and services;
 
•   to facilitate growth through de novo branching;
 
•   to facilitate growth through branch and whole bank acquisitions as opportunities arise; and
 
•   to improve our overall competitive position.

     As a stock holding company, we will have greater flexibility in structuring further mergers and acquisitions, including the form of consideration that we can use to pay for an acquisition. Our current mutual holding company structure precludes us from offering shares of common stock as consideration in a merger or acquisition. Potential sellers often want stock for at least part of the purchase price, because the exchange of stock provides the opportunity to enjoy future investment growth and to defer the recognition of capital gains. Our new stock holding company structure will enable us to offer stock or cash consideration, or a combination thereof and will, therefore, enhance our ability to compete with other bidders when acquisition opportunities arise. Other than our agreement to acquire Chart Bank, we currently have no arrangements or understandings regarding any specific acquisition.

Chart Bank Acquisition

     We decided to undertake the conversion in connection with our decision to acquire Chart Bank, a Massachusetts-chartered cooperative bank in stock form with $256.3 million in assets and $216.0 million in deposits as of September 30, 2004. Pursuant to our merger agreement with Chart Bank, dated September 1, 2004, Chart Bank will merge into and become a part of our subsidiary bank, Benjamin Franklin Bank, immediately following completion of the conversion.

     The acquisition will enable us to expand our branch network into Middlesex County, Massachusetts, where Chart Bank maintains two offices in Waltham and one office in Newton. In addition to expanding our geographic branching outreach, this acquisition will enable us to leverage our

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capital base and is expected to improve operating efficiency through increased scale. Our pro forma assets and deposits, after giving effect to the acquisition and the stock offering, assuming 6,612,500 shares are sold in the offering, would have been $836.7 million and $616.2 million, respectively, at September 30, 2004. See “Pro Forma Data” on page [#].

     In our merger agreement with Chart Bank, we agreed that the Chart Bank stockholders may elect to receive either $30.75 in cash or 3.075 shares of our common stock for each share of Chart Bank stock held by them, with 45.0% of the aggregate consideration to be paid in cash and 55.0% of the aggregate consideration to be paid in common stock. The aggregate consideration for the Chart Bank acquisition will be $22,492,000 in cash and 2,401,575 shares of our common stock, assuming that the Chart Bank options are cashed out at the closing rather than being exercised by optionees prior to the closing.

     If, for any reason, the Chart Bank acquisition cannot be completed, our Board will consider whether to proceed with the conversion. If we were to decide to proceed with the conversion without Chart Bank, we would resolicit subscribers, send them a modified prospectus and provide them with an opportunity to increase, decrease or rescind their orders. If for any reason the conversion cannot be completed, we will not proceed with the Chart Bank acquisition.

Terms of The Conversion and Offering

     We are offering between 4,250,000 and 5,750,000 shares of common stock of Benjamin Franklin Bancorp for sale to the public at an offering price of $10 per share. The subscription offering is made to Benjamin Franklin Bank’s eligible depositors, our tax qualified employee benefit plans and our officers, directors and employees. Shares not sold to these persons may be made available to the public in a direct community offering, and shares not purchased in the subscription offering or the direct community offering may be offered for sale through a syndicated community offering. The maximum number of shares that we sell in the offering may increase by up to 15.0%, to 6,612,500 shares, as a result of regulatory considerations, demand for the shares in the offering, or positive changes in financial markets in general and with respect to financial institution stocks in particular. Unless the number of shares of common stock to be offered is increased to more than 6,612,500 or decreased to less than 4,250,000, or the offering is extended beyond [date], 2005, subscribers will not have the opportunity to modify or rescind their stock orders. In addition, we will contribute shares of our authorized but unissued common stock to the Benjamin Franklin Bank Charitable Foundation, a new charitable foundation to be established by Benjamin Franklin Bank, in an amount up to 8.0% of the number of shares we actually sell in the offering, up to a maximum of 400,000 shares, which is 8.0% of the number of shares that would be issued at the 5,000,000 share midpoint of the offering range.

     If we do not receive orders for at least 4,250,000 shares of common stock, the minimum of the offering range, then we may apply up to 2,082,500 unsubscribed shares toward the merger consideration to be paid to Chart Bank stockholders, but only in order to issue sufficient shares to achieve the minimum of the offering range. This limitation was established to ensure that the Chart Bank stockholders’ ownership interest in Benjamin Franklin Bancorp will not exceed 49.0%. Applying unsubscribed shares toward the merger will not increase or reduce the number of shares issued to Chart Bank stockholders in the merger, but will reduce the total number of shares outstanding after the conversion and merger and will therefore increase the percentage of our outstanding stock owned by former Chart Bank stockholders.

     All investors will pay the same $10 purchase price per share. Investors will not be charged a commission to purchase shares of common stock. Ryan Beck & Co., Inc., our marketing agent in the offering, will use its best efforts to assist us in selling shares of our common stock. Ryan Beck & Co., Inc. is not obligated to purchase any shares of common stock in the offering.

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How We Determined The Offering Range And The $10 Per Share Stock Price

     The amount of common stock we are offering in the conversion is based on an independent appraisal of the estimated market value of Benjamin Franklin Bancorp, assuming the offering, the funding of the Benjamin Franklin Bank Charitable foundation and the acquisition of Chart Bank are completed. RP Financial, LC., our independent appraiser, has estimated that, as of November 26, 2004, this market value ranged from $69.9 million to $85.5 million, with a midpoint of $78.0 million. Based on this valuation and the $10 per share price, the number of shares of common stock being offered for sale by Benjamin Franklin Bancorp will range from 4,250,000 shares to 5,750,000 shares. In addition, we will contribute shares of our authorized but unissued common stock to the Benjamin Franklin Bank Charitable Foundation in an amount up to 8.0% of the number of shares we actually sell in the offering, up to a maximum of 400,000 shares, which maximum is 8.0% of the number of shares that would be issued at the 5,000,000 share midpoint of the offering range. The contribution of shares of our common stock to the Benjamin Franklin Bank Charitable Foundation will have the effect of reducing our pro forma valuation. See “Comparison of Independent Valuation and Pro Forma Financial Information With and Without the Foundation” on page [#]. We will issue an additional 2,401,575 shares of common stock to the Chart Bank stockholders as consideration for the Chart Bank merger. These shares are in addition to the shares issued in the offering, unless we elect to apply up to 2,082,500 unsubscribed shares toward the merger consideration in order to issue sufficient shares to achieve the minimum of the offering range. The $10 per share price was selected primarily because it is the price most commonly used in mutual-to-stock conversions of financial institutions.

     The appraisal is based in part on Benjamin Franklin Bancorp’s financial condition and results of operations, the effect of the additional capital raised by the sale of shares of common stock in the offering, the acquisition of Chart Bank and an analysis of a peer group of 10 publicly traded thrift holding companies that RP Financial, LC. considered comparable to Benjamin Franklin Bancorp.

     The following table presents a summary of selected pricing ratios for the peer group companies and the pricing ratios for Benjamin Franklin Bancorp. The estimated appraised value and the resulting premium/discount took into consideration the potential financial impact of the conversion, the contribution to the Benjamin Franklin Bank Charitable Foundation, adoption of stock based benefit plans consistent with industry practice, and the proposed acquisition of Chart Bank.

                         
            Price as a % of   Price as a % of
    Price as a Multiple   Pro Forma   Pro Forma Tangible
    of Pro Forma   Stockholders'   Stockholders'
    Earnings Per Share
   Equity Per Share
   Equity Per Share
Benjamin Franklin Bancorp (pro forma data as of September 30, 2004):
                        
Maximum
     34.09x       83.40 %     129.70 %
Minimum
     28.85x       78.31 %     132.63 %
Valuation of Peer Group Companies as of November 26, 2004
                       
Averages
     19.04x       166.24 %     178.05 %
Medians
     20.34x       159.61 %     169.23 %

     The independent appraisal does not indicate market value. Investors should not assume or expect that the valuation of Benjamin Franklin Bancorp as indicated above means that the common stock will trade at or above the $10 purchase price after the conversion.

     The independent appraisal will be updated prior to the completion of the conversion. Any changes to the appraisal would be subject to regulatory approval. The estimated pro forma market value

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of Benjamin Franklin Bancorp common stock to be sold in the conversion may be increased over the maximum level of $57.5 million by up to 15.0%, to up to $66.1 million, without notification to those who subscribed for shares in the offering. If this occurs, the maximum number of shares to be sold will correspondingly increase. See “Pro Forma Data” on page [#]. In the event that the updated appraisal results in an increase in the maximum valuation range to more than $66.1 million, or a decrease in the minimum valuation range below $42.5 million, the offering would not be completed without a resolicitation of subscribers. See “Pro Forma Data” on page [#], and “The Conversion And The Offering—Stock Pricing and Number of Shares to be Issued” on page [#].

After-Market Performance Information Provided by Independent Appraiser

     The following information was provided to the Board of Directors by RP Financial, LC. as part of the appraisal. The table presents information for all standard mutual-to-stock conversion transactions completed between January 1, 2003 and November 26, 2004. The information shows the average and median after-market performance of the trading price of the common stock at certain points after the completion of the stock conversion. Based on the independent valuation, Benjamin Franklin Bancorp has initial pro forma price-to-tangible stockholders’ equity ratios as of September 30, 2004 of 132.63%, 131.41%, 129.70%, and 128.21% at the minimum, midpoint, maximum, and maximum as adjusted of the valuation range, respectively. During the period, the average closing price to tangible stockholders’ equity ratios in the conversions are lower than the range of pro forma price to book ratios for Benjamin Franklin Bancorp and, with the exception of NewAlliance Bancshares, Inc. of Connecticut, which also involved the acquisition of other financial institutions, there were no other mutual-to-stock conversions with pro forma price-to-tangible stockholders’ equity ratios exceeding 100.0%. Thus, the pro forma price-to-tangible stockholders’ equity ratios for Benjamin Franklin Bancorp exceed by a significant amount essentially all of the comparable pro forma pricing ratios for standard mutual-to-stock conversions completed during the January 1, 2003 to November 26, 2004 period that did not also involve acquisitions of other financial institutions. The high pro forma price-to-tangible stockholders’ equity ratios for Benjamin Franklin may have a negative effect on any potential price appreciation of our stock. The information shown in the following table was not included in the appraisal report.

Mutual-to-Stock Conversion Offerings with Completed Closing Dates
between January 1, 2003 and November 26, 2004

                                         
    Appreciation From Initial Trading Date
                                    Through
    Conversion                           November
Transaction
   Date
   1 day
   1 week
   1 month
   26, 2004
Third Century Bancorp, Inc. — IN
     06/30/04       13.2 %     10.5 %     12.5 %     30.0 %
SE Financial Corp. — PA
     05/06/04       (0.5 %)     (1.5 %)     (6.0 %)     11.0 %
NewAlliance Bancshares, Inc. — CT
     04/02/04       51.7 %     45.3 %     36.5 %     47.8 %
KNBT Bancorp, Inc. — PA
     11/03/03       68.8 %     67.5 %     70.5 %     71.1 %
Rainier Pacific Fin Group — WA
     10/21/03       69.9 %     66.0 %     61.9 %     78.9 %
Community First Bancorp, Inc. — KY
     06/27/03       20.0 %     20.0 %     20.5 %     40.0 %
Rantoul First Bank, s.b. — IL
     04/02/03       15.1 %     20.0 %     23.5 %     60.0 %
Provident Fin. Services, Inc. — NJ
     01/16/03       55.0 %     56.5 %     51.5 %     93.5 %
CCSB Financial Corp. — MO
     01/09/03       20.0 %     23.1 %     25.0 %     50.0 %
 
            
     
     
     
 
 
             34.8 %     34.2 %     32.9 %     53.6 %

     RP Financial, LC. advised the Board that the appraisal was prepared in conformance with the regulatory appraisal methodology. That methodology requires a valuation based on an analysis of the trading prices of comparable public companies whose stocks have traded for at least one year prior to the valuation date. RP Financial, LC. also advised the Board that the aftermarket trading experience of recent transactions was considered in the appraisal as a general indicator of current market conditions, but was not relied upon as a primary valuation methodology.

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     The table above is not intended to be indicative of how our stock may perform. Stock appreciation is affected by many factors, including, but not limited to, the factors set forth below. Before you make an investment decision, we urge you to carefully read this prospectus, including, but not limited to, the “Risk Factors” generally, beginning on page [#].

     Data represented in the table were calculated using a small sample. The data, therefore, may not be meaningful for investors. For example, in the period between January 1, 2003 and November 26, 2004, only one transaction had closed where the initial pro forma price-to-tangible stockholders’ equity ratio was 100.0% or greater. While stock prices of converting institutions have, on average, increased for the transactions presented, there can be no assurance that our stock price will not trade below $10 per share, as has been the case for some converted mutual institutions. In addition, the conversion transactions from which the data are derived occurred primarily during a falling interest rate environment, during which time the market for financial institution stocks typically increases. If interest rates rise, our net interest income and the value of our assets could be reduced, which could negatively affect our stock price. The increase in any particular company’s stock price is subject to various factors, including the amount of proceeds a company raises and the quality of management and management’s ability to deploy proceeds (such as through investments, the acquisition of other financial institutions or other businesses, the payment of dividends and common stock repurchases). In addition, stock prices may be affected by general market conditions, the interest rate environment, the market for financial institutions, merger or takeover transactions, the presence of professional and other investors who purchase stock on speculation, as well as other unforeseeable events not necessarily in the control of management.

     Our Board of Directors carefully reviewed the information provided to it by RP Financial, LC. through the appraisal process, but did not make any determination regarding whether prior standard mutual-to-stock conversions have been undervalued on a price to tangible stockholders’ equity basis, nor did the Board draw any conclusions regarding how the historical data reflected above may affect Benjamin Franklin Bancorp’s appraisal. Instead, the Board engaged RP Financial, LC. to help it understand the regulatory process as it applies to the appraisal and to advise the Board as to how much capital Benjamin Franklin Bancorp would be required to raise under the regulatory appraisal guidelines.

Who May Order Shares Of Common Stock In The Offering

     Under the terms of our plan of conversion, we are offering the shares of common stock of Benjamin Franklin Bancorp in a “subscription offering,” in the following descending order of priority:

(1)   First, to depositors with accounts at Benjamin Franklin Bank with aggregate balances of at least $50.00 on May 31, 2003;
 
(2)   Second, to depositors (other than Benjamin Franklin Bank officers, directors, trustees, corporators and their associates) with accounts at Benjamin Franklin Bank with aggregate balances of at least $50.00 on [_____________];
 
(3)   Third, to Benjamin Franklin Bancorp’s and Benjamin Franklin Bank’s tax qualified employee plans, including our employee stock ownership plan; and
 
(4)   Fourth, to Benjamin Franklin Bancorp’s and Benjamin Franklin Bank’s officers, directors, trustees and employees who do not have a higher priority right.

     Any remaining shares may be offered for sale in a “direct community offering” that can begin concurrently with, during or immediately following the subscription offering. Orders received in the direct community offering will be subordinate to subscription offering orders. Shares will be allocated in

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the community offering, to the extent available, first to natural persons who live in the Massachusetts counties of Norfolk, Worcester and Middlesex, then to the general public. Shares of common stock not purchased in the subscription offering or the direct community offering may be offered for sale through a “syndicated community offering” managed by Ryan Beck. We have the right to accept or reject, in our sole discretion, orders we receive in the direct community offering and syndicated community offering.

     If we do not receive orders for at least 4,250,000 shares of common stock (the minimum of the offering range) in the subscription and direct community offerings, then instead of proceeding with a syndicated community offering we may choose to apply up to 2,082,500 unsubscribed shares toward the merger consideration to be paid to Chart Bank stockholders, but only in order to issue sufficient shares to achieve the minimum of the offering range. We may also do this after holding a syndicated community offering if sufficient shares to achieve the minimum of the offering range are not ordered in the subscription, direct community and syndicated community offerings.

     If we receive orders for more shares than we are offering, we may not be able to fully or partially fill your order. Shares will be allocated pursuant to our plan of conversion. A detailed description of share allocation procedures can be found in the section entitled “The Conversion And The Offering.”

How You May Purchase Shares Of Common Stock

     In the subscription offering and the community offering you may pay for your shares only by:

(1)   personal check, bank check or money order made payable directly to Benjamin Franklin Bancorp, Inc. (do not endorse third-party checks); or
 
(2)   authorizing us to withdraw money from your Benjamin Franklin Bank deposit account(s) without check writing privileges.

     If you wish to use your Benjamin Franklin Bank individual retirement account to pay for your shares, please be aware that you must first transfer your funds to a self-directed retirement account with a trustee other than Benjamin Franklin Bank. The transfer of such funds to a new trustee takes time, so please contact the Stock Information Center promptly for further information. Also, Benjamin Franklin Bank is not permitted to lend funds (including funds drawn on a Benjamin Franklin Bank line of credit or overdraft checking) to anyone for the purpose of purchasing shares of common stock in the offering.

     You can subscribe for shares of common stock in the offering by delivering to Benjamin Franklin Bancorp a signed and completed original stock order form, together with full payment or authorization to withdraw from one or more of your Benjamin Franklin Bank deposit accounts without checkwriting privileges, provided we receive the stock order form before 10:00 a.m. Massachusetts time on [date] 2005 (regardless of when the reply envelope is postmarked). Checks and money orders will be immediately deposited by us into a Benjamin Franklin Bank segregated savings account or, at our discretion, another insured depository institution. We will pay interest at Benjamin Franklin Bank’s passbook savings rate, currently 0.50% per annum, from the date those funds are received until completion or termination of the offering. Withdrawals from certificates of deposit at Benjamin Franklin Bank for the purpose of purchasing common stock in the offering may be made without incurring an early withdrawal penalty. All funds authorized for withdrawal from deposit accounts with Benjamin Franklin Bank must be available within the deposit accounts at the time the stock order form is received. However, funds will not be withdrawn from the accounts until the offering is completed and will continue to earn interest at the applicable contractual deposit account rate until the completion of the offering. A hold will be placed on the amount of funds designated on your stock order form. Those funds will be unavailable to you for check writing or other purposes during the offering. After we receive an order, the order cannot be

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revoked or changed. Payment may not be made by wire transfer or any other electronic transfer of funds. In addition, we are not required to accept copies or facsimiles of order forms.

     For a further discussion regarding the stock ordering procedures, see “The Conversion and the Offering—Procedure for Purchasing Shares” on page [#].

Limits On How Much Common Stock You May Purchase

     The minimum number of shares of common stock that may be purchased is 25.

     No person, or persons exercising subscription rights through a single qualifying deposit account held jointly, may purchase more than 15,000 shares of common stock ($150,000) in the offering. If any of the following persons purchase stock, their purchases, when combined with your purchases, cannot exceed 25,000 shares ($250,000) in all categories of the offering, combined:

•   Your spouse, or any relative of you or your spouse, who either shares your home or is a director, trustee or officer of Benjamin Franklin Bancorp or Benjamin Franklin Bank;
 
•   Companies or other entities in which you are a director, officer or partner, or have a 10.0% beneficial ownership interest;
 
•   Trusts or other estates in which you have a substantial beneficial interest or as to which you serve as a trustee or in another fiduciary capacity; or
 
•   Other persons who may be acting together with you as associates or persons acting in concert.

     Persons exercising subscription rights through qualifying deposit accounts registered to the same address will be subject to this overall purchase limitation.

     Subject to regulatory approval, we may increase or decrease the purchase limitations at any time. For additional information on purchase limitations, including the detailed definitions of “associates” and “acting in concert,” see “The Conversion And The Offering—Limitations On Common Stock Purchases” on page [#]. We have the right to determine, in our sole discretion, whether prospective purchasers are associates or acting in concert. Our tax-qualified employee benefit plans, including our employee stock ownership plan, are authorized to purchase up to 10.0% of the shares issued in the offering (including shares issued to the Benjamin Franklin Bank Charitable Foundation) without regard to these purchase limitations.

Deadline For Orders Of Common Stock

     If you wish to purchase shares, a properly completed original stock order form, together with full payment for the shares of common stock, must be received by us (not postmarked) no later than 10:00 a.m., Massachusetts time, on [date], 2005. You may submit your order form in one of three ways: by mail using the return envelope provided, by overnight courier to the address indicated on the order form or by taking the stock order form and payment to our Stock Information Center located at our headquarters, 58 Main Street, Franklin, Massachusetts. Stock order forms may not be hand-delivered to branches of Benjamin Franklin Bank. Once submitted, your order is irrevocable unless the offering is terminated or extended beyond [date], 2005.

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You May Not Sell Or Transfer Your Subscription Rights

     If you order stock in the subscription offering, you will be required on the stock order form to state that you are purchasing the stock for yourself and that you have no agreement or understanding to sell or transfer your subscription rights. We intend to take legal action, including reporting persons to federal or state regulatory agencies, against anyone who we believe sells or gives away their subscription rights. We will not accept your order if we have reason to believe that you sold or transferred your subscription rights. In addition, you may not add the names of others for joint stock registration unless you share the same subscription offering eligibility priority.

     The stock order form requires that you list all deposit accounts in which the subscriber had an interest, giving all names on each account and the account number at the applicable eligibility date, May 31, 2003 or [__________]. Failure to provide this information, or providing incomplete or incorrect information, may result in a loss of part or all of your share allocation.

How We Intend To Use The Proceeds From The Offering

     We estimate net proceeds from the offering will be between $40.9 million and $55.8 million, or $64.4 million if the offering range is increased by 15.0%. We intend to use the net proceeds for the cash merger consideration portion of the acquisition of Chart Bank, approximately $22,492,000 assuming that the Chart Bank options are cashed out at the closing rather than being exercised by optionees prior to the closing; and for the loan to the employee stock ownership plan to fund its purchase of shares of common stock, between $3.7 million and $4.9 million, or $5.6 million if the offering is increased by 15.0%. Of the net proceeds remaining, we intend to retain at the parent-company level between $10.9 million and $20.8 million of the net proceeds, or $26.6 million if the offering range is increased by 15.0%, and to invest in Benjamin Franklin Bank approximately $4.9 million to $8.6 million of the net proceeds, or $10.7 million if the offering range is increased by 15.0%. Benjamin Franklin Bancorp may use the funds to pay cash dividends, repurchase shares of common stock and for general corporate purposes. Funds invested in Benjamin Franklin Bank will be used to support increased lending and new products and services. We may also use the net proceeds for future business expansion by establishing new branches or by acquiring branches or other whole banks. Initially, a substantial portion of the net proceeds could be used to pay down certain Federal Home Loan Bank of Boston borrowings, as well as invested in short-term investments, investment-grade debt obligations and mortgage-backed securities.

     Our Issuance Of Shares Of Common Stock To The Benjamin Franklin Bank Charitable Foundation

     To further our commitment to our local community, we intend to establish a charitable foundation as part of the conversion and issue shares of common stock to it immediately following completion of the conversion. We intend to make an initial contribution to the foundation of a number of shares of our authorized but unissued common stock in an amount up to 8.0% of the number of shares actually sold in the offering, up to a maximum of 400,000 shares. Assuming that we issue this maximum number, our contribution would have an initial market value of $4.0 million and we would record a pre-tax expense of approximately $4.0 million during the quarter in which the conversion is completed. The charitable foundation will be dedicated exclusively to supporting charitable causes and community development activities. The issuance of these additional shares of common stock to the charitable foundation will:

•   dilute the voting interests of purchasers of shares of our common stock in the offering,
 
•   result in an expense, and a reduction in earnings, of $4.0 million, offset in part by a corresponding tax benefit, during the quarter in which the contribution is made, and

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•   reduce our pro forma market value and, accordingly, the number of shares that we otherwise would have offered for sale in the stock offering.

     See “Risk Factors—The Contribution of Shares to the Charitable Foundation Will Dilute Your Ownership Interests and Adversely Affect Net Income in 2005” on page [#], “Comparison of Independent Valuation and Pro Forma Financial Information With and Without the Foundation” on page [#] and “The Benjamin Franklin Bank Charitable Foundation” on page [#].

Delivery Of Stock Certificates

     Certificates representing shares of common stock sold in the offering will be mailed to the certificate registration address noted on the order form, as soon as practicable following completion of the offering and receipt of all necessary regulatory approvals. It is possible that, until certificates for the common stock are available and delivered to purchasers, purchasers might not be able to sell the shares of common stock that they ordered, even though the common stock will have begun trading.

Expiration of the Offering

     The subscription offering will expire at 10:00 a.m., Massachusetts time, on [date], 2005, unless extended by Benjamin Franklin Bancorp with the approval of the Massachusetts Commissioner of Banks and the Federal Reserve Board, if required. The direct community and syndicated community offerings, if conducted, must be completed by [date], 2005 unless extended, with regulatory approval, if necessary. If the subscription offering and/or direct community and syndicated community offerings extend beyond [date], 2005, we will be required to resolicit subscribers before proceeding with the offering. In no event may we extend the offering beyond October 28, 2006.

Steps We May Take If We Do Not Receive Orders For The Minimum Number Of Shares

     If we do not receive orders for at least 4,250,000 shares of common stock in the subscription offering, we may take several steps in order to issue the minimum number of shares of common stock in the offering range. Specifically, we may:

(i)   make shares available to the public in a direct community offering,
 
(ii)   offer shares for sale through a syndicated community offering;
 
(iii)   apply up to 2,082,500 unsubscribed shares toward the stock portion of the merger consideration to be delivered to stockholders of Chart Bank;
 
(iv)   increase the purchase and ownership limitations;
 
(v)   seek regulatory approval to extend the offering beyond the [date], 2005 expiration date, provided that any such extension will require us to resolicit subscriptions received in the offering; and
 
(vi)   terminate the offering, returning the subscription funds with interest and canceling deposit account withdrawal authorizations.

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Purchases By Officers And Directors

     Our directors and executive officers will pay the same $10 per share purchase price paid by all other persons who purchase shares of common stock in the offering. We expect our directors and executive officers, together with their associates, to subscribe for 196,050 shares of common stock in the offering. Following the conversion and the issuance of additional shares to the Benjamin Franklin Bank Charitable Foundation and to the Chart Bank stockholders in the acquisition, these shares will represent 2.5% of our total outstanding shares of common stock at the midpoint of the offering range. In addition, the Chart Bank directors who will become Benjamin Franklin Bancorp directors are expected to beneficially own 825,128 shares of common stock, or 10.6% of our total outstanding shares of common stock at the midpoint of the offering range, based on these directors’ current beneficial ownership of Chart Bank common stock and assuming that such directors exchange 55.0% of their Chart Bank shares for shares of Benjamin Franklin Bancorp common stock and that all Chart Bank options held by these directors are cashed out at the closing rather than being exercised prior to the closing.

     Stock-Based Benefits To Management And Potential Dilution To Stockholders Resulting From The Conversion

     We have established an employee stock ownership plan that will award shares of our common stock to eligible employees primarily based on their compensation. At the completion of the conversion, we will make, or contribute funds to a subsidiary to enable it to make, a loan to the employee stock ownership plan to enable it to purchase shares of our common stock in the offering or in the open market following completion of the offering. It is expected that our employee stock ownership plan will purchase 8.0% of the shares issued in the offering, including shares issued to the Benjamin Franklin Bank Charitable Foundation. If we receive orders for more shares of common stock than the maximum of the offering range, the employee stock ownership plan will have first priority to purchase shares over this maximum, up to the total of 8.0% of shares of common stock issued in the offering. This plan is a tax-qualified retirement plan for the benefit of all our employees. Assuming the employee stock ownership plan purchases 492,000 shares in the offering (the number of shares it would purchase at the maximum of the offering range), we will recognize additional compensation expense of $4.9 million over a 30-year period, assuming the shares of common stock have a fair market value of $10 per share for the full 30-year period. If, in the future, the shares of common stock have a fair market value greater or less than $10 per share, the compensation expense will increase or decrease accordingly.

     In addition to the employee stock ownership plan, following the conversion we intend to implement a stock-based incentive plan that will provide for grants of stock options and restricted stock to directors, officers and employees. The stock-based incentive plan cannot be established sooner than six months after the offering and, if implemented less than one year after the offering, would require the approval of our stockholders by two-thirds of the outstanding shares of Benjamin Franklin Bancorp common stock. If the stock-based incentive plan is implemented more than one year after the offering, the stock-based incentive plan must be approved by a majority of the shares of Benjamin Franklin Bancorp present and voting. If such plan is adopted less than one year after completion of the offering, the number of options granted and restricted shares awarded under the plan may not exceed 10.0% and 4.0%, respectively, of the total shares issued in the offering, including shares issued to the Benjamin Franklin Bank Charitable Foundation. However, these limitations would not apply if such stock-based incentive plan is implemented one year or more after the completion of the offering. Finally, if adopted within one year, the stock-based incentive plan would be subject to such other limitations as may be imposed by the Massachusetts Commissioner of Banks, including certain vesting requirements.

     The employee stock ownership plan and grants under the stock-based incentive plan will increase our future compensation costs, thereby reducing our earnings. The Financial Accounting Standards

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Board, or FASB, has proposed that beginning in 2005 it will require companies to expense the cost of stock options granted to officers, directors and employees. Based upon FASB’s final rules for the accounting of stock options, we expect to expense the cost of stock options, and this will increase our compensation costs. Additionally, while our intention is to fund our stock-based incentive plan with shares purchased on the open market, stockholders will experience a dilution in their ownership interest if newly issued shares of common stock are used to fund stock options and stock awards. See “Risk Factors—Our Stock Benefit Plans Will Increase Our Costs, Which Will Reduce Our Income” and “Management of Benjamin Franklin Bancorp and Benjamin Franklin Bank—Benefit Plans” on page [#].

     The following table summarizes the stock benefits that our officers, directors and employees may receive following the reorganization and offering, at the maximum of the offering range and assuming that we initially implement a stock-based incentive plan granting options to purchase 10.0% of the shares issued in the offering and issued to the Benjamin Franklin Bank Charitable Foundation and awarding shares of common stock equal to 4.0% of the shares issued in the offering and issued to the Charitable Foundation (the maximum permissible amount of grants and awards if such plan is adopted less than one year from the date of completion of the offering). The table also shows the dilution to stockholders if all these shares are issued from authorized but unissued shares, instead of shares purchased in the open market. A portion of the stock grants shown in the table below may be made to non-management employees.

                                                 
    Aggregate Number of Shares to be            
    Granted or Purchased
           Value of Grants (3)
                    As a   Dilution        
    At the   At the   Percentage   Resulting if   At the   At the
    minimum   maximum   of Common   We Issue New   minimum   maximum
    of the   of the   Stock to be   Shares for   of the   of the
    Offering   Offering   Issued in the   Stock Benefit   Offering   Offering
    Range
   Range
   Offering(1)
   Plans (2)
   Range
   Range
    (Dollars in thousands)
Employee stock ownership plan
     367,200       492,000       8.0 %     5.4 %   $ 3,672     $ 4,920  
Stock options under stock-based incentive plan
     459,000       615,000       10.0 %     6.7 %     —       —  
Restricted stock awards under stock-based incentive plan
     183,600       246,000       4.0 %     2.8 %     1,836       2,460  
 
    
 		      
 		      
 		              
 		      
 		  
Total
     1,009,800       1,353,000       22.0 %     13.7 %   $ 5,508     $ 7,380  
 
    
 		      
 		      
 		              
 		      
 		  

(1)   Includes shares issued to the Benjamin Franklin Bank Charitable Foundation, but does not include shares issued to Chart Bank stockholders as merger consideration (other than the up to 2,082,500 unsubscribed shares that may be applied toward the merger consideration to be paid to Chart Bank stockholders in order to issue sufficient shares to achieve the minimum of the offering range).
 
(2)   Calculated at the maximum of the offering range.
 
(3)   The actual value of restricted stock grants will be determined based on their fair value as of the date grants are made. For purposes of this table, fair value is assumed to be the same as the offering price of $10 per share. No value is given for options because their exercise price will be equal to the fair market value of the common stock on the day the options are granted.

Market For Common Stock

     Currently, there are no outstanding shares of Benjamin Franklin Bancorp common stock. We have applied to have the common stock of Benjamin Franklin Bancorp quoted on the Nasdaq National Market following the conversion, under the symbol “BFBC.” See “Market For The Common Stock” on page [#].

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Our Dividend Policy

     Upon completion of the conversion, our Board of Directors will have the authority to declare dividends on our common stock, subject to statutory and regulatory requirements. While our Board of Directors intends to consider a policy of paying cash dividends, payment of dividends will depend upon a number of factors, including our future operating results and financial condition, ongoing capital requirements, regulatory limitations, tax considerations and general economic conditions. As a result, we cannot assure you that Benjamin Franklin Bancorp will pay dividends, or if paid, the amounts of such dividends, or whether such dividends will continue to be paid in the future. See “Our Policy Regarding Dividends” on page [#].

Tax Consequences of the Conversion

     Based on certain factual representations and assumptions, which we believe are consistent with the facts that will exist at the effective time of the conversion, our legal counsel, Foley Hoag LLP, has delivered to us its legal opinion to the effect that the conversion will constitute or be part of a tax-free “reorganization” for federal income tax purposes. As such, neither Benjamin Franklin Bank nor Benjamin Franklin Bancorp will recognize gain or loss as a result of the conversion. The opinion of our legal counsel, however, is not binding on the Internal Revenue Service. See “The Conversion And The Offering—Tax Aspects Of The Conversion And The Chart Bank Acquisition” on page [#].

Conditions to Completion of the Conversion

     We cannot complete our conversion and related offering unless:

•   We issue at least the minimum number of shares of common stock offered;
 
•   We receive the approval of the Massachusetts Commissioner of Banks and the Federal Reserve Board;
 
•   We complete the conversion by [date].

In addition, we intend to complete the conversion together with the completion of the Chart Bank acquisition. If, for any reason, the Chart Bank acquisition cannot be completed, our Board would consider whether to proceed with the conversion. If we were to decide to proceed with the conversion without Chart Bank, we would resolicit subscribers, providing them with a modified prospectus and provide them with an opportunity to increase, decrease or rescind their orders. If for any reason the conversion cannot be completed, we will not proceed with the Chart Bank acquisition.

How You Can Obtain Additional Information – Stock Information Center

     The employees of Benjamin Franklin Bank’s branch offices may not, by law, assist with investment related questions about the offering. If you have any questions regarding the stock offering, you may call our Stock Information Center, toll free, at [   ], Monday through Friday between 9:30 a.m. and 4:00 p.m., Massachusetts time. You may also visit our Stock Information Center, which is located at our headquarters, 58 Main Street, Franklin, Massachusetts. The Stock Information Center will be closed on weekends and bank holidays. Our branches will not have offering materials and cannot accept completed order forms.

     To ensure that each person receives a prospectus at least 48 hours before the offering deadline, we may not mail prospectuses any later than five days prior to such date or hand-deliver

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prospectuses later than two days prior to that date. Stock order forms may only be delivered if accompanied or preceded by a prospectus.

     We will make reasonable attempts to provide a prospectus and offering materials to holders of subscription rights. The subscription offering and all subscription rights will expire at 10:00 a.m., Massachusetts time, on [date], 2005, whether or not we have been able to locate each person entitled to subscription rights.

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SELECTED CONSOLIDATED FINANCIAL INFORMATION OF
BENJAMIN FRANKLIN BANCORP

     The following tables contain certain information concerning the financial position and results of operations of Benjamin Franklin Bancorp at the dates and for the periods indicated. This information should be read in conjunction with the Consolidated Financial Statements of Benjamin Franklin Bancorp, M.H.C. and Subsidiaries and notes thereto commencing on page [#] of this prospectus and the Management’s Discussion and Analysis of Benjamin Franklin Bancorp commencing on page [#]of this prospectus. The selected financial data and selected operating data of Benjamin Franklin Bancorp as of December 31, 2003 and 2002 and for the years then ended have been derived from Benjamin Franklin Bancorp’s consolidated financial statements which have been audited by Wolf & Company, P.C., independent accountants. See “Experts” on page [#]. The data presented at and for the nine months ended September 30, 2004 and 2003 were derived from unaudited consolidated financial statements and reflect, in the opinion of management, all adjustments (consisting only of normal recurring adjustments) which are necessary to present fairly the results for such interim periods. Interim results at and for the nine months ended September 30, 2004 are not necessarily indicative of the results that may be expected for the year ending December 31, 2004.

     The selected financial condition data and selected operating data of Benjamin Franklin Bancorp at or for the years ended December 31, 2001, 2000 and 1999 have been derived from Benjamin Franklin Bancorp’s consolidated financial statements that have been audited by Arthur Andersen LLP. Because Arthur Andersen has ceased accounting and auditing operations, Benjamin Franklin Bancorp is unable to obtain written consent of Arthur Andersen to incorporate their report in this prospectus. Because Arthur Andersen has not consented to incorporating their report in this prospectus, investors will not be able to recover against Arthur Andersen in connection with the use of their report. In addition, the ability of Arthur Andersen to satisfy any claims (including claims arising from its provision of auditing and other services to Benjamin Franklin Bancorp) is limited as a result of the diminished amount of assets of Arthur Andersen that are now or may in the future be available to satisfy claims. See “Risk Factors—Risks Related to Prior Auditors of Benjamin Franklin Bancorp” on page [#].

                                                 
    At September 30,   At December 31,
    2004
   2003
   2002
   2001
   2000
   1999
    (Dollars in thousands)
Selected Financial Condition Data:
                                                
Total assets
   $ 517,931     $ 458,844     $ 452,230     $ 430,084     $ 443,092     $ 429,635  
Loans, net
     375,516       288,862       261,933       257,566       284,232       269,125  
Investment securities
     101,551       110,254       114,728       86,136       112,884       113,315  
Deposits
     399,562       380,257       373,300       360,979       388,332       324,050  
Short-term borrowings
     29,000       0       0       0       19,400       48,280  
Long-term debt (1)
     55,000       45,000       45,000       36,000       6,000       21,000  
Retained earnings
     30,586       29,301       29,814       26,937       24,794       28,652  

(1)   Long-term debt includes advances from the Federal Home Loan Bank of Boston and subordinated debt. See “Investment Activities—Borrowings” on page [#].

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    Nine Months Ended    
    September 30,
   Years Ended December 31,
    2004
   2003
   2003
   2002
   2001
   2000
   1999
    (Dollars in thousands)
Selected Operating Data:
                                                        
Interest and dividend income
   $ 15,223     $ 14,529     $ 19,532     $ 21,406     $ 26,441     $ 28,064     $ 24,730  
Interest expense
     5,024       5,134       6,752       7,594       12,397       16,216       12,533  
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		  
Net interest income
     10,199       9,395       12,780       13,812       14,044       11,848       12,197  
Provision for loan losses (1)
     470       300       625       1,412       51       1       70  
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		  
Net interest income after provision for loan losses
     9,729       9,095       12,155       12,400       13,993       11,847       12,127  
Non-interest income
     1,658       2,450       2,990       1,285       1,752       1,819       1,510  
Gain (loss) on sales of securities, net
     8       113       86       1,569       (2,529 )     (6,784 )     1,402  
Non-interest expense
     9,457       9,626       12,724       12,115       11,565       10,851       10,280  
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		  
Income (loss) before income tax expense
     1,938       2,032       2,507       3,139       1,651       (3,969 )     4,759  
Income tax expense (2)
     626       651       819       443       1,610       708       1,858  
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		  
Net income (loss)
   $ 1,312     $ 1,381     $ 1,688     $ 2,696     $ 41       ($4,677 )   $ 2,901  
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		  

(1)   Refer to “Management’s Discussion and Analysis of Benjamin Franklin Bancorp,” beginning on page [#] for discussion of changes in the provision for loan losses for the periods from 2001 forward. For the year ended December 31, 2000, the provision declined to $1,000 from $70,000 recorded for the 1999 period, due primarily to the fact that impaired loans dropped to $308,000 at December 31, 2000 from $1.3 million at December 31, 1999.
 
(2)   Refer to “Management’s Discussion and Analysis of Benjamin Franklin Bancorp,” beginning on page [#] for discussion of changes in income tax expense for the periods from 2001 forward. For the year ended December 31, 2000, Benjamin Franklin recorded income tax expense of $708,000 despite incurring a pre-tax loss because a valuation allowance was established for the deferred tax asset associated with the impairment charge recorded to reflect the unrealized net losses on equity securities.
                                                         
    At or For the Nine    
    Months Ended    
    September 30,
   At or For the Years Ended December 31,
    2004
   2003
   2003
   2002
   2001
   2000
   1999
Selected Financial Ratios and Other Data:
                                                        
Performance Ratios:
                                                        
Return on assets (ratio of net income to average total assets) (1)
     0.36 %     0.40 %     0.36 %     0.61 %     0.01 %     (1.09 %)     0.76 %
Return on equity (ratio of net income to average equity) (1)
     5.85 %     6.13 %     5.65 %     9.45 %     0.16 %     (16.32 %)     10.23 %
Average interest rate spread (1) (2)
     2.67 %     2.76 %     2.76 %     3.32 %     3.29 %     2.87 %     3.47 %
Net interest margin (1)(3)
     3.03 %     2.93 %     2.98 %     3.47 %     3.51 %     3.57 %     4.30 %
Efficiency ratio (4)
     79.31 %     87.13 %     84.78 %     75.69 %     72.84 %     78.07 %     73.53 %
Non-interest expense to average total assets (1)
     2.61 %     2.76 %     2.73 %     2.76 %     2.64 %     2.53 %     2.70 %
Average interest-earning assets to average interest bearing liabilities
     124.43 %     110.89 %     114.38 %     108.04 %     106.92 %     88.16 %     86.56 %
Asset Quality Ratios:
                                                        
Non-performing assets to total assets
     0.08 %     0.14 %     0.10 %     0.00 %     0.04 %     0.04 %     0.04 %
Non-performing loans to total loans
     0.11 %     0.24 %     0.16 %     0.00 %     0.06 %     0.06 %     0.07 %
Allowance for loan losses to non-performing loans
     714.93 %     394.35 %     544.92 %     115,600.00 %     749.68 %     603.39 %     657.22 %
Allowance for loan losses to total loans
     0.80 %     0.95 %     0.87 %     0.88 %     0.46 %     0.38 %     0.44 %
Capital Ratios:
                                                        
Equity to total assets at end of period
     5.91 %     6.22 %     6.39 %     6.59 %     6.26 %     5.60 %     6.67 %
Average equity to average assets
     6.19 %     6.47 %     6.42 %     6.49 %     5.82 %     6.67 %     7.45 %
Risk-based capital ratio (bank only) at end of period
     13.05 %     14.01 %     13.94 %     13.54 %     9.65 %     7.69 %     10.08 %
Other Data:
                                                        
Number of full service offices
     6       6       6       6       6       6       6  

(1)   Ratios for the nine months ended September 30, 2004 and 2003 are annualized.
 
(2)   The average interest rate spread represents the difference between the weighted-average yield on interest-earning assets and the weighted- average cost of interest-bearing liabilities for the period.
 
(3)   The net interest margin represents net interest income as a percent of average interest-earning assets for the period.
 
(4)   The efficiency ratio represents non-interest expense for the period minus expenses related to the amortization of intangible assets divided by the sum of net interest income (before the loan loss provision) plus non-interest income (excluding net gains (losses) on sale of bank assets and the pension plan curtailment loss).

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SELECTED CONSOLIDATED FINANCIAL INFORMATION OF CHART BANK

     The following tables contain certain information concerning the financial position and results of operations of Chart Bank at the dates and for the periods indicated. This information should be read in conjunction with the Consolidated Financial Statements of Chart Bank, A Cooperative Bank and Subsidiaries and notes thereto commencing on page [#] of this prospectus and the Management’s Discussion and Analysis of Chart Bank commencing on page [#] of this prospectus. The selected financial data and selected operating data of Chart Bank as of December 31, 2003, 2002, 2001, 2000 and 1999, and for the years then ended have been derived from Chart Bank’s consolidated financial statements which have been audited by Wolf & Company, P.C., independent accountants. See “Experts” on page [#]. The data presented at and for the nine months ended September 30, 2004 and 2003 were derived from unaudited consolidated financial statements and reflect, in the opinion of management, all adjustments (consisting only of normal recurring adjustments) which are necessary to present fairly the results for such interim periods. Interim results at and for the nine months ended September 30, 2004 are not necessarily indicative of the results that may be expected for the year ending December 31, 2004.

                                                 
         
    At
September		   At December 31,
    30, 2004
   2003
   2002
   2001
   2000
   1999
    (Dollars in thousands)
Selected Financial Condition Data:
                                                
Total assets
   $ 256,261     $ 209,854     $ 202,932     $ 181,645     $ 168,702     $ 142,823  
Loans, net
     175,572       139,890       122,965       126,088       121,237       107,237  
Investment securities
     35,495       29,369       29,532       21,585       19,589       15,853  
Deposits
     215,972       175,801       170,279       145,549       152,749       129,436  
Borrowings
     22,000       15,930       14,986       19,731       1,923       3,449  
Stockholders’ equity
     17,546       17,399       16,061       14,980       13,384       9,362  
                                                         
    Nine Months Ended    
    September 30,
   Years Ended December 31,
    2004
   2003
   2003
   2002
   2001
   2000
   1999
    (Dollars in thousands)
Selected Operating Data:
                                                        
Interest and dividend income
   $ 8,006     $ 7,621     $ 10,091     $ 11,033     $ 11,718     $ 11,023     $ 8,838  
Interest expense
     2,732       2,648       3,452       4,466       5,870       6,061       4,595  
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		  
Net interest income
     5,274       4,973       6,639       6,567       5,848       4,962       4,243  
Provision for loan losses
     90       90       120       120       120       131       180  
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		  
Net interest income after provision for loan losses
     5,184       4,883       6,519       6,447       5,728       4,831       4,063  
Non-interest income
     1,916       2,048       2,665       3,270       3,544       1,529       1,033  
Non-interest expense
     5,636       4,806       6,406       7,190       7,004       5,954       4,914  
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		  
Income before income tax provision (benefit)
     1,464       2,125       2,778       2,527       2,268       406       182  
Income tax provision (benefit)
     680       823       1,076       958       850       (141 )     48  
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		  
Net income
   $ 784     $ 1,302     $ 1,702     $ 1,569     $ 1,418     $ 547     $ 134  
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		  

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    At or For the Nine    
    Months Ended    
    September 30,
   At or For the Years Ended December 31,
    2004
   2003
   2003
   2002
   2001
   2000
   1999
Selected Financial Ratios and Other Data:
                                                        
 
Performance Ratios:
                                                        
Return on assets (ratio of net income to average total assets) (1)
     0.44 %     0.86 %     0.83 %     0.81 %     0.80 %     0.35 %     0.11 %
Return on equity (ratio of net income to average equity) (1)
     5.95 %     10.61 %     10.28 %     10.31 %     10.37 %     4.43 %     1.48 %
Average interest rate spread (1) (2)
     3.40 %     3.87 %     3.83 %     3.88 %     3.39 %     2.99 %     3.21 %
Net interest margin (1)(3)
     3.52 %     4.00 %     3.96 %     4.06 %     3.81 %     3.56 %     3.75 %
Efficiency ratio (4)
     79.29 %     70.06 %     70.09 %     82.75 %     92.34 %     94.70 %     98.60 %
Non-interest expense to average total assets (1)
     3.19 %     3.16 %     3.13 %     3.72 %     4.05 %     3.94 %     4.22 %
Average interest-earning assets to average interest-bearing liabilities
     106.87 %     105.65 %     106.08 %     106.90 %     110.92 %     97.15 %     99.86 %
 
Asset Quality Ratios:
                                                        
Non-performing assets to total assets
     0.06 %     0.01 %     0.10 %     0.01 %     0.13 %     0.00 %     0.25 %
Non-performing loans to total loans
     0.08 %     0.02 %     0.15 %     0.02 %     0.18 %     0.00 %     0.32 %
Allowance for loan losses to total loans
     0.99 %     1.22 %     1.17 %     1.23 %     1.09 %     1.07 %     1.02 %
 
Capital Ratios:
                                                        
Equity to total assets at end of period
     6.85 %     8.31 %     8.29 %     7.91 %     8.25 %     7.93 %     6.55 %
Average equity to average assets
     7.47 %     8.08 %     8.10 %     7.87 %     7.71 %     7.92 %     7.46 %
Tier 1 risk-based capital ratio at end of period
     10.90 %     11.30 %     11.30 %     10.80 %     10.60 %     11.80 %     9.80 %
 
Other Data:
                                                        
Number of full service offices
     3       3       3       3       4       4       4  

(1)   Ratios for the nine months ended September 30, 2004 and 2003 are annualized.
 
(2)   The average interest rate spread represents the difference between the weighted-average yield on interest-earning assets and the weighted- average cost of interest-bearing liabilities for the period.
 
(3)   The net interest margin represents net interest income as a percent of average interest-earning assets for the period.
 
(4)   The efficiency ratio represents non-interest expense for the period divided by the sum of net interest income (before the loan loss provision) plus non-interest income (excluding net gains (losses) on sales of bank assets and deposits and loan referral fees).

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RISK FACTORS

          Please consider the following risk factors, in addition to those you may find elsewhere in this Prospectus, when deciding whether to purchase our common stock in the conversion.

Our Financial Success Depends In Part On The Success Of Our Acquisition of Chart Bank.

          Our future operating performance will depend, in part, on the success of the merger with Chart Bank, which will be the largest merger Benjamin Franklin Bancorp has consummated. The success of the merger will, in turn, depend on a number of factors, including our ability to:

•   integrate into Benjamin Franklin Bank the operations and branches of Chart Bank,
 
•   retain Chart Bank’s deposits and customers,
 
•   control future non-interest expenses in a manner that enables us to improve our overall operating efficiencies,
 
•   retain and integrate key personnel of Chart Bank into our operations, particularly those with specialized expertise in the CSSI ATM management business.

          Integration of Chart Bank into Benjamin Franklin Bank following the merger will require the dedication of the time and resources of our management and may temporarily distract management’s attention from our day-to-day business. No assurance can be given that we will successfully integrate Chart Bank’s operations into our own, or that we will achieve anticipated benefits of the merger or achieve earnings results in the future similar to those we, or Chart Bank, have achieved in the past. Further, no assurance can be given that we will effectively manage any growth resulting from the merger.

Our Commercial Real Estate, Construction And Commercial Business Loans May Expose Us To Increased Credit Risks, And This Risk Will Increase If We Succeed In Increasing These Types Of Loans.

          Residential real estate loans represent a smaller proportion of our loan portfolio than the average for savings institutions in New England. As of September 30, 2004, commercial real estate, construction and commercial business loans represented 28.9% of our loan portfolio. This percentage would have been 39.9% on a pro forma basis as of that date with the acquisition of Chart Bank, and we intend to grow commercial real estate and commercial business loans further as a proportion of our portfolio over the next several years. Construction loans, while they are not likely to increase as a percentage of total loans, are expected to increase in absolute terms in line with the overall growth in the bank’s loan portfolio. In general, construction loans, commercial real estate loans and commercial business loans generate higher returns, but also pose greater credit risks, than do owner-occupied residential mortgage loans. As our various commercial loan portfolios increase, the corresponding risks and potential for losses from these loans may also increase.

          The repayment of construction and commercial real estate loans depends on the business and financial condition of borrowers and, in the case of construction loans, on the economic viability of projects financed. A number of our borrowers have more than one construction or commercial real estate loan outstanding with us. Further, these loans are concentrated primarily in Eastern Massachusetts. Economic events and changes in government regulations, which we and our borrowers cannot control, could have an adverse impact on the cash flows generated by properties securing our construction and commercial real estate loans and on the values of the properties securing those loans. Commercial properties tend to decline in value more rapidly than residential owner-occupied properties during economic recessions. We held $104.3 million in construction and commercial real estate loans in our

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loan portfolio as of September 30, 2004 representing 27.6% of total loans on that date. On a pro forma basis on that date, assuming that the merger with Chart Bank had been completed, we would have had $212.2 million of these loans in our portfolio representing 38.3% of total loans.

          We make both secured and some short-term unsecured commercial business loans, holding $5.0 million of these loans in our loan portfolio as of September 30, 2004, representing 1.3% of total loans on that date. On a pro forma basis on that date, assuming that the merger with Chart Bank had been completed, we would have had $9.1 million of commercial business loans in our portfolio, representing 1.6% of total loans. Repayment of both secured and unsecured commercial business loans depends substantially on borrowers’ underlying business, financial condition and cash flows. Unsecured loans generally involve a higher degree of risk of loss than do secured loans because, without collateral, repayment is wholly dependent upon the success of the borrowers’ businesses. Secured commercial business loans are generally collateralized by equipment, leases, inventory and accounts receivable. Compared to real estate, that type of collateral is more difficult to monitor, its value is harder to ascertain, it may depreciate more rapidly and it may not be as readily saleable if repossessed.

Our Continuing Concentration Of Loans In Our Primary Market Area May Increase Our Risk.

          Our success depends primarily on the general economic conditions in the counties in which we conduct business, and in the Boston metropolitan area in general. Unlike larger banks that are more geographically diversified, we provide banking and financial services to customers primarily in Norfolk and Worcester Counties, Massachusetts, southwest of Boston, and to lesser degree in Middlesex and Suffolk Counties, which include the City of Boston and areas east of Boston. Following our proposed acquisition of Chart Bank, we will expand our presence in Middlesex and Suffolk Counties. The local economic conditions in our market area have a significant impact on our loans, the ability of the borrowers to repay these loans and the value of the collateral securing these loans. A significant decline in general economic conditions caused by inflation, recession, unemployment or other factors beyond our control would affect these local economic conditions and could adversely affect our financial condition and results of operations. Additionally, because we have a significant amount of commercial real estate loans, decreases in tenant occupancy may also have a negative effect on the ability of many of our borrowers to make timely repayments of their loans, which would have an adverse impact on our earnings.

Our Return On Equity May Initially Be Low Compared To Other Financial Institutions. A Low Return Could Lower The Trading Price Of Our Common Stock.

          Net income divided by average equity, known as “return on equity,” is a ratio many investors use to compare the performance of a financial institution to its peers. Our return on equity may be reduced due to the expenses we will incur in pursuing our growth strategies, the costs of being a public company and added expenses associated with our employee stock ownership plan and planned stock-based incentive plan. The increase in our core deposit intangible asset created by the Chart Bank acquisition will also have a negative impact on our return on equity, and if our periodic evaluation of the goodwill created by the Chart Bank acquisition results in a determination of impairment, we would be required to reduce its carrying value through a charge to earnings. Until we can increase our net interest income and non-interest income, we expect our return on equity to be below the industry average for public thrifts, which may negatively affect the value of our common stock. At the midpoint of the offering range, pro forma return on equity is estimated to be 2.43% compared to our comparable peer group return on equity of 9.38%.

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We May Have Difficulty Meeting Our Branch Expansion Goals, And Our Branch Expansion Strategy May Not Be Accretive To Earnings.

          Our growth plans include the opening of new branch offices in communities located between the Benjamin Franklin Bank and Chart Bank franchises as well as in other communities contiguous to those currently served by Benjamin Franklin Bank. Our ability to establish new branches will depend upon whether we can identify suitable sites and negotiate acceptable lease or purchase and sale terms, and we may not be able to do so, or it may take longer than we expect. Moreover, once we establish a new branch, numerous factors will contribute to its performance, such as a suitable location, qualified personnel and an effective marketing strategy. Additionally, it takes time for a new branch to gather significant loans and deposits to generate enough income to offset its expenses, some of which, like salaries and occupancy expense, are relatively fixed costs. There can be no assurance that our branch expansion strategy will be accretive to our earnings, or that it will be accretive to earnings within a reasonable period of time.

Strong Competition Within Our Market Area May Limit Our Growth And Profitability.

          We face significant competition both in attracting deposits and in the origination of loans. See “Business of Benjamin Franklin Bancorp— Market Area and Competition” on page [#]. Savings banks, credit unions, savings and loan associations and commercial banks operating in our primary market area have historically provided most of our competition for deposits. In addition, and particularly in times of high interest rates, we face additional and significant competition for funds from money-market mutual funds and issuers of corporate and government securities. Competition for the origination of real estate and other loans comes from other thrift institutions, commercial banks, insurance companies, finance companies, other institutional lenders and mortgage companies. Many of our competitors have substantially greater financial and other resources than ours. Moreover, we may face increased competition in the origination of loans if competing thrift institutions convert to stock form, because such converting thrifts would likely seek to invest their new capital into loans. Finally, credit unions do not pay federal or state income taxes and are subject to fewer regulatory constraints than savings banks and as a result, they may enjoy a competitive advantage over us. This advantage places significant competitive pressure on the prices of our loans and deposits.

Our Ability to Grow May Be Limited if We Cannot Make Acquisitions.

          In an effort to increase our loan and deposit growth, we will continue to seek to expand our banking franchise, including through acquisitions of other financial institutions or branches if opportunities arise. Our ability to grow through selective acquisitions of other financial institutions or branches will depend on successfully identifying, acquiring and integrating them. We compete with other financial institutions with respect to proposed acquisitions. We cannot assure you that we will be able to identify attractive acquisition candidates or make acquisitions on favorable terms. In addition, we cannot assure you that we can successfully integrate any acquired financial institutions or branches into our banking organization in a timely or efficient manner, that we will be successful in retaining existing customer relationships or that we can achieve anticipated operating efficiencies.

We Operate In A Highly Regulated Environment And May Be Adversely Affected By Changes In Law And Regulations.

          We are subject to extensive regulation, supervision and examination. See “Regulation and Supervision” on page [#]. Any change in the laws or regulations applicable to us, or in banking regulators’ supervisory policies or examination procedures, whether by the Massachusetts Commissioner of Banks, the FDIC, the Federal Reserve Board, other state or federal regulators, the United States Congress or the Massachusetts legislature could have a material adverse effect on our business, financial condition, results of operations and cash flows.

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          We are subject to regulations promulgated by the Massachusetts Division of Banks, as our chartering authority, and by the FDIC as the insurer of our deposits up to certain limits. We also belong to the Federal Home Loan Bank System and, as a member of such system, we are subject to certain limited regulations promulgated by the Federal Home Loan Bank of Boston. In addition, the Federal Reserve Board regulates and oversees Benjamin Franklin Bancorp, as a Bank holding company.

          This regulation and supervision limits the activities in which we may engage. The purpose of regulation and supervision is primarily to protect the FDIC’s insurance fund and our depositors and borrowers. Regulatory authorities have extensive discretion in the exercise of their supervisory and enforcement powers. They may, among other things, impose restrictions on the operation of a banking institution, the classification of assets by such institution and such institution’s allowance for loan losses. Regulatory and law enforcement authorities also have wide discretion and extensive enforcement powers under various consumer protection and civil rights laws, including the Truth-in-Lending Act, the Equal Credit Opportunity Act, the Fair Housing Act, the Real Estate Settlement Procedures Act and Massachusetts’s deceptive acts and practices law. These laws also permit private individual and class action law suits and provide for the recovery of attorneys fees in certain instances. No assurance can be given that the foregoing regulations and supervision will not change so as to affect us adversely.

Changes in Market Interest Rates Could Adversely Affect Our Financial Condition and Results of Operations.

          Our profitability, like that of most financial institutions, depends to a large extent upon our net interest income, which is the difference, or spread, between our gross interest income on interest-earning assets, such as loans and securities, and our interest expense on interest-bearing liabilities, such as deposits and borrowed funds. Accordingly, our results of operations and financial condition depend largely on movements in market interest rates and our ability to manage our interest-rate-sensitive assets and liabilities in response to these movements, including our adjustable-rate mortgage loans, which represent the largest portion of our residential loan portfolio. Changes in interest rates could have a material adverse effect on our business, financial condition, results of operations and cash flows. Because, as a general matter, our interest-bearing liabilities re-price or mature more quickly than our interest-earning assets, an increase in interest rates generally would result in a decrease in our interest rate spread and net interest income. See “Management’s Discussion and Analysis of Benjamin Franklin Bancorp—Financial Condition and Results of Operations—Quantitative and Qualitative Disclosure About Risk Management” on page [#].

          Changes in interest rates also affect the value of our interest-earning assets, including, in particular, the value of our investment securities portfolio. Generally, the value of investment securities fluctuates inversely with changes in interest rates. At September 30, 2004, our securities portfolio totaled $101.6 million, including $94.4 million of securities available for sale. Unrealized gains and losses on securities available for sale are reported as a separate component of surplus, net of related taxes. Decreases in the fair value of securities available for sale therefore would have an adverse affect on our stockholders’ equity. See “Business of Benjamin Franklin Bancorp—Investment Activities” on page [#].

          We are also subject to reinvestment risk relating to interest rate movements. Decreases in interest rates can result in increased prepayments of loans and mortgage-related securities, as borrowers refinance to reduce their borrowing costs. Under these circumstances, we are subject to reinvestment risk to the extent that we are not able to reinvest funds from such prepayments at rates that are comparable to the rates on the prepaid loans or securities. On the other hand, increases in interest rates on adjustable-rate mortgage loans result in larger mortgage payments due from borrowers, which could potentially increase our level of loan delinquencies and defaults.

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The Issuance of Additional Shares May Dilute Your Ownership Interest.

          The exact number of shares of common stock to be issued in the conversion will not be determined until RP Financial, LC. updates its appraisal immediately prior to the completion of the sale of the common stock. However, in general, the higher the number of common stock shares issued, the lower our pro forma net income per share and pro forma stockholders’ equity per share, and the higher the purchase price of a share of our common stock as a percentage of pro forma stockholders’ equity per share and as a multiple of net income per share. Due to the intangibles (goodwill and core deposit value) created from the acquisition of Chart Bank, our pro forma tangible stockholders’ equity per share increases with a higher number of common shares issued, and therefore the purchase price of a share of our common stock as a percentage of pro forma stockholders’ tangible equity per share decreases. See “Pro Forma Data—Pro Forma Unaudited Financial Statements Giving Effect to Conversion and Acquisition” on page [#]. In addition, the issuance of shares to stockholders of Chart Bank in connection with the merger will dilute the ownership interest of purchasers of shares of common stock in the conversion.

Relatively High Pro Forma Pricing Multiples May Negatively Affect After-Market Stock Performance Compared with Other Recently Converted Institutions.

          The purchase price of a share of our common stock as a percentage of pro forma tangible stockholders’ equity per share of the shares of common stock sold in the conversion ranges from 132.63% at the minimum of the estimated offering range to 128.21% at 15.0% above the estimated offering range, taking into consideration the shares to be issued to the Chart Bank stockholders in the merger. The ratio of that purchase price to pro forma tangible stockholders’ equity exceeds by a significant amount the price to pro forma tangible stockholders’ equity of common stock sold in all standard mutual-to-stock conversions to date that do not also involve acquisitions of other financial institutions. Prospective investors should be aware that, as a result of the relatively high ratio of the price to pro forma tangible stockholders’ equity, the after-market performance of our common stock may be less favorable during the period immediately following the conversion than the price performance of common stock sold in recent mutual-to-stock conversions that do not involve an acquisition of another institution.

The Implementation of Stock-Based Benefit Plans May Dilute Your Ownership Interest.

          We expect to adopt a stock-based benefit plan following the conversion, subject to stockholder approval, and such plan could dilute the voting rights of our stockholders. Federal and state banking regulations allow our Board of Directors, and the Board may decide, to adopt one or more stock plans for the benefit of our employees, officers and directors, including a stock-based incentive plan. See “Management of Benjamin Franklin Bancorp and Benjamin Franklin Bank—Benefit Plans—Stock-Based Incentive Plan” on page [#]. This stock-based benefit plan will be funded either through open market purchases, if permitted, or from the issuance of authorized but unissued shares of common stock of Benjamin Franklin Bancorp. While our intention is to fund this plan through open market purchases, stockholders will experience a reduction or dilution in ownership interest of approximately 12.9% (approximately 9.1% dilution for stock options and approximately 3.8% dilution for restricted stock awards) in the event newly issued shares are used to fund stock options and stock awards made under this plan.

The Contribution of Shares to the Charitable Foundation Will Dilute Your Ownership Interests and Adversely Affect Net Income in 2005.

          We will make a contribution to the Benjamin Franklin Bank Charitable Foundation of 8.0% of the shares actually sold in the offering, up to a maximum of 400,000 shares of common stock, valued at the $10 offering price. Persons purchasing shares in the offering will have their ownership and voting

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interests in Benjamin Franklin Bancorp diluted by up to 7.4% and 6.5% at the minimum and maximum, respectively, of the offering range.

          This contribution will have a material adverse effect on our reported net income for the quarter and year in which the contribution to the Benjamin Franklin Bank Charitable Foundation is made. Assuming that the contribution will be fully deductible, the after-tax expense of the contribution will reduce net income that we report in our 2005 fiscal year by approximately $2.6 million, assuming the foundation is funded with 400,000 shares. If the contribution is determined to be less than fully deductible, then the after-tax expense recorded in that quarter could be a maximum of $4.0 million.

          We believe that our contribution to the Benjamin Franklin Bank Charitable Foundation should be deductible for federal income tax purposes. However, we do not have any assurance that the IRS will grant tax-exempt status to the Benjamin Franklin Bank Charitable Foundation. If the contribution is not deductible, we would not receive any tax benefit from the contribution. In addition, even if the contribution is tax deductible, we may not have sufficient profits to be able to fully use the deduction over the six years allowed. For additional discussion, see “The Benjamin Franklin Bank Charitable Foundation” on page [#].

There May Be Delays in Completion of the Offering and the Chart Bank Acquisition, and Stock Orders are Irrevocable.

          We will hold funds submitted to purchase shares of common stock in connection with the offering until we complete or terminate the offering, and we may not complete or terminate the offering for an extended period of time. The offering may be delayed one or more times because its completion will be subject to various conditions, including the receipt of regulatory approvals of both the conversion and the Chart Bank merger. If, for any reason, the Chart Bank acquisition cannot be completed, our Board will consider whether to proceed with the conversion. If we were to decide to proceed with the conversion without Chart Bank, we would resolicit subscribers, providing them with a modified prospectus and an opportunity to increase, decrease or rescind their orders. However, unless we resolicit subscribers or terminate the conversion, orders to purchase shares of common stock made in connection with the offering will be irrevocable. No assurance can be given that we will complete or terminate the offering on or before any particular date. However, if the offering is not completed by [date], 2005, the offering will be terminated and all subscribers will have applicable subscription funds returned promptly with interest (or have applicable withdrawal authorizations canceled).

We Have Never Issued Stock and We Cannot Guarantee That An Active Trading Market Will Develop.

          As a mutual institution, Benjamin Franklin Bancorp has never issued capital stock and, consequently, there is currently no existing market for our common stock. We have received conditional approval to have the our common stock quoted on the Nasdaq National Market under the symbol “BFBC” subject to the completion of the conversion and compliance with initial listing conditions, including the presence of at least three market makers.

          A public trading market having the desirable characteristics of depth, liquidity and orderliness depends upon the existence of willing buyers and sellers at any given time, the presence of which is dependent upon the individual decisions of buyers and sellers over which neither we nor any market maker has control. Accordingly, there can be no assurance that an active and liquid trading market for our common stock will develop or that, if developed, it will continue. The failure of an active and liquid trading market to develop would likely have a material adverse effect on the value of the our common stock. In addition, no assurance can be given that a purchaser in the conversion will be able to resell our common stock at or above the purchase price of the shares, nor can any assurance be given that a Chart Bank stockholder receiving shares in the merger will be able to sell those shares at or above the $10 price

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used in the calculation of the exchange ratio for the merger. See “Market for The Common Stock” on page [#].

Our Stock Value May Suffer From Anti-Takeover Provisions That May Impede Potential Takeovers.

          Our governing statute, and our articles and by-laws, contain provisions (sometimes known as “anti-takeover” provisions) that may impede efforts to acquire us, or stock purchases in furtherance of an acquisition, even though acquisition efforts or stock purchases might otherwise have a favorable effect on the price of our common stock. Those provisions will also make it more difficult to remove our board and management. The Massachusetts Business Corporation Law provides for staggered directors’ terms, limits the stockholders’ ability to remove directors and empowers only the directors to fill board vacancies. Even if our board elects to opt out of these statutory provisions, our articles contain similar provisions. Our articles and by-laws also provide for, among other things, restrictions on the acquisition of more than 10.0% of our outstanding voting stock for a period of five years after completion of the conversion, and approval of certain actions, including certain business combinations, by specified percentages of our “disinterested Directors” (as defined in the articles) or by specified percentages of the shares outstanding and entitled to vote. The articles also authorize the Board of Directors to issue shares of preferred stock, the rights and preferences of which may be designated by the Board, without the approval of our stockholders. The articles also establish supermajority voting requirements for amendments to the articles and by-laws, limit stockholders’ ability to call special meetings of stockholders, and impose advance notice provisions on stockholders’ ability to nominate directors or to propose matters for consideration at stockholder meetings.

          Our employee stock ownership plan, which expects to purchase 8.0% of the shares issued in the offering, contains provisions that permit participating employees to direct the voting of shares held in the employee stock ownership plan, and those provisions may have anti-takeover effects.

          The Benjamin Franklin Bank Charitable Foundation will be funded with up to 400,000 shares of our common stock, approximately 5.1% of the shares issued and outstanding after the conversion (at the midpoint of the valuation range), including shares issued to the Chart Bank stockholders in the merger. At least a majority of the Benjamin Franklin Bank Charitable Foundation’s Board of Directors will consist of current directors of Benjamin Franklin Bancorp.

          Federal and state regulations and laws may also have anti-takeover effects. The Change in Bank Control Act and the Bank Holding Company Act, together with Federal Reserve Board regulations under those acts, require that a person obtain the consent of the Federal Reserve Board before attempting to acquire control of a bank holding company. In addition, Massachusetts laws place certain limitations on acquisitions of the stock of banking institutions and imposes restrictions on business combination transactions between publicly held Massachusetts corporations and stockholders owning 5% or more of the stock of those corporations.

          For more information about the anti-takeover effects of our articles and by-laws, the employee stock ownership plan and certain federal and state regulations and laws, see “Restrictions on Acquisition of Benjamin Franklin Bancorp and Benjamin Franklin Bank” on page [#].

Risks Related To Prior Auditors Of Benjamin Franklin Bancorp

          Arthur Andersen LLP, which audited the financial statements included in this prospectus of Benjamin Franklin Bancorp for the year ended December 31, 2001, was convicted on June 15, 2002 of federal obstruction of justice arising from the government’s investigation of Enron Corp. As it has ceased operations, Arthur Andersen LLP has not consented to include in this prospectus their report on the

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financial statements of Benjamin Franklin Bancorp for the year ended December 31, 2001. Under Section 11 of the Securities Act of 1933, investors may have no effective remedy against Arthur Andersen LLP in connection with a material misstatement or omission in the 2001 financial statements of Benjamin Franklin Bancorp included in this prospectus.

FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements, which can be identified by the use of such words as estimate, project, believe, intend, anticipate, plan, seek, expect and similar expressions. These forward-looking statements include:

•   statements of our goals, intentions and expectations;
 
•   statements regarding our business plans and prospects and growth and operating strategies;
 
•   statements regarding the asset quality of our loan and investment portfolios; and
 
•   estimates of our risks and future costs and benefits.

These forward-looking statements are subject to significant risks, assumptions and uncertainties, including, among other things, the following important factors that could affect the actual outcome of future events:

•   our ability to consummate the acquisition of Chart Bank;
 
•   our ability to integrate the Chart Bank merger successfully;
 
•   our ability to enter new markets successfully and take advantage of growth opportunities;
 
•   significantly increased competition among depository and other financial institutions;
 
•   inflation and changes in the interest rate environment that reduce our margins or reduce the fair value of financial instruments;
 
•   general economic conditions, either nationally or in our market areas, that are worse than expected;
 
•   adverse changes in the securities markets;
 
•   legislative or regulatory changes that adversely affect our business;
 
•   changes in consumer spending, borrowing and savings habits;
 
•   changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the Financial Accounting Standards Board and the Public Company Accounting Oversight Board; and
 
•   changes in our organization, compensation and benefit plans; and
 
•   the risk factors described above.

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Because of these and other uncertainties, our actual future results may be materially different from the results indicated by these forward-looking statements. We discuss these and other uncertainties in “Risk Factors” beginning on page [#]. We disclaim any intent or obligation to update forward-looking statements whether in response to new information, future events or otherwise.

HOW WE INTEND TO USE THE NET PROCEEDS FROM THE OFFERING

          The amount of net proceeds will depend on the total number of shares of common stock sold in the offering, which in turn will depend on RP Financial, LC.’s appraisal as well as regulatory and market considerations, and the expenses incurred in connection with the offering. Although we will not be able to determine the actual net proceeds from the sale of the common stock until we complete the offering, we estimate the net proceeds will be between $40.9 million and $55.8 million, or $64.4 million if the offering is increased by 15.0%.

          The net proceeds may vary because the total expenses relating to the offering may be more or less than our estimates. For example, our expenses would increase if a syndicated community offering is used to sell shares not purchased in the subscription offering and community offering. The net proceeds will also vary if the number of shares to be sold in the offering is adjusted to reflect a change in the estimated pro forma market value of Benjamin Franklin Bancorp or if our employee stock ownership plan purchases shares in the open market at an average cost that is higher or lower than the $10 per share offering price. Payments for shares made through withdrawals from existing deposit accounts at Benjamin Franklin Bank will not result in the receipt of new funds for investment but will result in a reduction of Benjamin Franklin Bank’s deposits.

          We are undertaking the conversion and offering at this time primarily in order to provide the consideration for the acquisition of Chart Bank. For further information, see “The Acquisition of Chart Bank” on page [#].

          The table below indicates the net proceeds to us based on the number of shares sold in the offering.

                                 
                            Adjusted
    Minimum
   Midpoint
   Maximum
   Maximum
    (Dollars in thousands)
Gross proceeds
   $ 42,500     $ 50,000     $ 57,500     $ 66,125  
Less offering expenses
     (1,554 )     (1,622 )     (1,691 )     (1,771 )
 
    
 		      
 		      
 		      
 		  
Net offering proceeds
     40,946       48,378       55,809       64,354  
Less:
                                
Cash for acquisition of Chart Bank (1)
     (21,469 )     (21,469 )     (21,469 )     (21,469 )
Employee stock ownership plan loan
     (3,672 )     (4,320 )     (4,920 )     (5,610 )
 
    
 		      
 		      
 		      
 		  
Cash/excess
     15,805       22,589       29,420       37,275  
 
    
 		      
 		      
 		      
 		  
Distribution of cash/excess:
                                
To Benjamin Franklin Bank
     4,869       6,727       8,585       10,721  
Retained by Benjamin Franklin Bancorp.
     10,936       15,862       20,835       26,554  

(1)   Equals cash portion of acquisition price of $19,649,250 plus cost of cashing out all outstanding options of $2,842,750, net of tax benefit of option cash-out of $1,023,390. Does not include 6,613,000 of other miscellaneous cash costs of the Chart Bank acquisition, consisting primarily of personnel contract payouts, contract termination fees, deal advisor fees and prepayment penalty on Federal Home Loan Bank of Boston advance repayments. Assumes that the Chart Bank options are cashed out at the closing rather than being exercised by optionees prior to the closing.

          The cash retained by Benjamin Franklin Bancorp, after paying the cash acquisition costs of the Chart Bank merger, lending funds to the employee stock ownership plan and contributing a portion to Benjamin Franklin Bank as shown above, would be used for general operating purposes. No specific uses are contemplated at this time. The additional funds available could be used as follows:

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•   To pay cash dividends to stockholders;
 
•   To repurchase shares of our common stock;
 
•   To invest in securities;
 
•   To finance the acquisition of other financial institutions or branches although, except for the proposed acquisition of Chart Bank, we do not currently have any agreements or understandings regarding any specific acquisition transaction; and
 
•   for other general corporate purposes, including investment of additional funds in Benjamin Franklin Bank.

          Initially, a substantial portion of the remaining net proceeds will be invested in short-term investments, investment grade debt obligations and mortgage-backed securities.

          Massachusetts regulations restrict our ability to repurchase shares of our common stock for a three-year period following the conversion. See “Restrictions on Acquisition of Benjamin Franklin Bancorp and Benjamin Franklin Bank—Statutory and Regulatory Restrictions—Massachusetts Banking Law” on page [#].

          Benjamin Franklin Bank could use funds from the offering provided to it by Benjamin Franklin Bancorp as follows:

•   to pay down Federal Home Loan Bank of Boston borrowings, including a prepayment penalty of approximately $2.0 million;
 
•   to fund new loans, including single-family mortgage loans, multi-family residential and commercial mortgage loans, commercial business loans, construction loans and consumer loans;
 
•   to expand its retail banking franchise by establishing new branches;
 
•   to enhance existing products and services and to support new products and services;
 
•   to invest in securities; and
 
•   for other general corporate purposes.

OUR POLICY REGARDING DIVIDENDS

          Following completion of the offering, our Board of Directors will have the authority to declare dividends on our common stock, subject to statutory and regulatory requirements. In the future, our Board intends to consider a policy of paying cash or stock dividends on the common stock. However, no decision has been made with respect to whether or when the payment of dividends may occur. The payment of dividends will depend upon a number of factors, including capital requirements, Benjamin Franklin Bancorp’s and Benjamin Franklin Bank’s financial condition and results of operations, tax considerations, statutory and regulatory limitations and general economic conditions. No assurances can be given that any dividends will be paid or that, if paid, will not be reduced or eliminated in the future.

          The only funds available for the payment of dividends on the capital stock of Benjamin Franklin Bancorp will be cash and cash equivalents held by Benjamin Franklin Bancorp, dividends paid by

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Benjamin Franklin Bank to Benjamin Franklin Bancorp and borrowings. Benjamin Franklin Bank will be prohibited from paying cash dividends to Benjamin Franklin Bancorp to the extent that any such payment would reduce Benjamin Franklin Bank’s capital below required capital levels or would impair the liquidation account to be established for the benefit of Benjamin Franklin Bank’s eligible account holders and supplemental eligible account holders at the time of the conversion. See “The Conversion and The Offering—Effects of the Conversion—Liquidation Rights” on page [#].

          FDIC regulations limit Benjamin Franklin Bank’s ability to pay dividends to Benjamin Franklin Bancorp under certain circumstances. For example, Benjamin Franklin Bank could not pay dividends if it was not in compliance with applicable regulatory capital requirements. In addition, Massachusetts law provides that dividends may not be declared, credited or paid by Benjamin Franklin Bank so long as there is any impairment of capital stock. No dividend may be declared on Benjamin Franklin Bank’s common stock for any period other than for which dividends are declared upon preferred stock, except as authorized by the Commissioner. The approval of the Commissioner is also required for Benjamin Franklin Bank to declare a dividend, if the total of all dividends declared by it in any calendar year shall exceed the total of its net profits for that year combined with its retained net profits of the preceding two years, less any required transfer to surplus or a fund for the retirement of any preferred stock.

          If Benjamin Franklin Bancorp issues preferred stock, the holders of the preferred stock may have dividend preferences over the holders of common stock.

MARKET FOR THE COMMON STOCK

          We have not previously issued common stock, so there is currently no established market for the common stock. We have applied to have our common stock quoted on the Nasdaq National Market under the symbol “BFBC” after completion of the offering. Ryan Beck & Co., Inc. has advised us that it intends to make a market in the common stock following the conversion, but is under no obligation to do so. We will encourage and assist additional market makers to make a market in our common stock.

          The development of an active trading market depends on the existence of willing buyers and sellers, the presence of which is not within our control, or the control of any market maker. The number of active buyers and sellers of the common stock at any particular time may be limited. Under such circumstances, you could have difficulty selling your shares on short notice, and, therefore, you should not view the common stock as a short-term investment. We cannot assure you that an active trading market for the common stock will develop or that, if it develops, it will continue, nor can we assure you that if you purchase shares you will be able to sell them at or above $10 per share.

          We also cannot assure that a Chart Bank stockholder receiving Benjamin Franklin Bancorp shares in the Chart Bank acquisition will be able to sell those shares at or above $10 per share. See “Risk Factors—We Have Never Issued Stock And We Cannot Guarantee That An Active Market Will Develop” on page [#] and “The Acquisition of Chart Bank” on page [#].

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REGULATORY CAPITAL COMPLIANCE

          At September 30, 2004, Benjamin Franklin Bancorp and Benjamin Franklin Bank independently exceeded all their regulatory capital requirements. The following table sets forth the historical regulatory capital of Benjamin Franklin Bancorp and Benjamin Franklin Bank and the approximate pro forma regulatory capital of Benjamin Franklin Bancorp and Benjamin Franklin Bank after giving effect to the conversion and the Chart Bank acquisition, based on the assumptions set forth in the table on page [#] as to net offering proceeds and the cash cost of the Chart Bank acquisition and the employee stock ownership plan loan. The pro forma risk-based capital amounts assume the investment of the net proceeds in assets which have a risk-weight of 20.0% under applicable regulations as if such net proceeds had been received and so applied at September 30, 2004. The Federal Reserve Board has adopted capital adequacy guidelines for bank holding companies (on a consolidated basis) substantially similar to the FDIC’s capital requirements for Benjamin Franklin Bank. On a pro forma basis after completion of the conversion and the acquisition, Benjamin Franklin Bancorp’s and Benjamin Franklin Bank’s pro forma regulatory capital will exceed these requirements. See “Regulation and Supervision—Federal Regulation—Capital Requirements” on page [#].

                                                 
    Benjamin Franklin   Pro Forma at September 30, 2004 based on (1)
    Historical at   4,250,000 Shares Sold @   5,000,000 Shares Sold @
    September 30, 2004
   $10 Per Share (2)
   $10 Per Share
            Percent           Percent           Percent
            of           of           of
    Amount
   Assets (3)
   Amount
   Assets (3)
   Amount
   Assets (3)
    (Dollars in thousands)
Benjamin Franklin Bancorp:
                                                
Total capital shown on financial statements
   $ 30,586       5.91 %   $ 89,296       10.94 %   $ 95,972       11.67 %
 
    
 		      
 		      
 		      
 		      
 		      
 		  
Tier 1 leverage capital
     37,281       7.42 %     63,758       8.27 %     70,434       9.06 %
Tier 1 leverage requirement
     20,093       4.00 %     30,832       4.00 %     31,099       4.00 %
 
    
 		      
 		      
 		      
 		      
 		      
 		  
Excess capital
   $ 17,188       3.42 %   $ 32,926       4.27 %   $ 39,335       5.06 %
 
    
 		      
 		      
 		      
 		      
 		      
 		  
Tier 1 risk-based capital
     37,281       11.71 %     63,758       13.25 %     70,434       14.59 %
Tier 1 risk-based requirement(2)
     12,738       4.00 %     19,254       4.00 %     19,307       4.00 %
 
    
 		      
 		      
 		      
 		      
 		      
 		  
Excess capital
   $ 24,543       7.71 %   $ 44,504       9.25 %   $ 51,127       10.59 %
 
    
 		      
 		      
 		      
 		      
 		      
 		  
Total risk-based capital
     40,298       12.65 %     68,528       14.24 %     75,204       15.58 %
Total risk-based requirement
     25,476       8.00 %     38,507       8.00 %     38,614       8.00 %
 
    
 		      
 		      
 		      
 		      
 		      
 		  
Excess capital
   $ 14,822       4.65 %   $ 30,021       6.24 %   $ 36,590       7.58 %
 
    
 		      
 		      
 		      
 		      
 		      
 		  
Benjamin Franklin Bank:
                                                
Total capital shown on financial statements
   $ 38,785       7.50 %   $ 83,498       10.37 %   $ 84,708       10.49 %
 
    
 		      
 		      
 		      
 		      
 		      
 		  
Tier 1 leverage capital
     36,481       7.27 %     48,960       6.44 %     50,170       6.58 %
Tier 1 leverage requirement
     20,059       4.00 %     30,407       4.00 %     30,481       4.00 %
 
    
 		      
 		      
 		      
 		      
 		      
 		  
Excess capital
   $ 16,422       3.27 %   $ 18,553       2.44 %   $ 19,689       2.58 %
 
    
 		      
 		      
 		      
 		      
 		      
 		  
Tier 1 risk-based capital
     36,481       11.50 %     48,960       10.22 %     50,170       10.47 %
Tier 1 risk-based requirement(2)
     12,685       4.00 %     19,158       4.00 %     19,173       4.00 %
 
    
 		      
 		      
 		      
 		      
 		      
 		  
Excess capital
   $ 23,796       7.50 %   $ 29,802       6.22 %   $ 30,997       6.47 %
 
    
 		      
 		      
 		      
 		      
 		      
 		  
Total risk-based capital
     39,498       12.45 %     53,730       11.22 %     54,940       11.46 %
Total risk-based requirement
     25,371       8.00 %     37,317       8.00 %     38,347       8.00 %
 
    
 		      
 		      
 		      
 		      
 		      
 		  
Excess capital
   $ 14,127       4.45 %   $ 15,413       3.22 %   $ 16,593       3.46 %
 
    
 		      
 		      
 		      
 		      
 		      
 		  

     

[Additional columns below]

[Continued from above table, first column(s) repeated]

                                 
    Pro Forma at September 30, 2004 based on (1)
    5,750,000 Shares Sold @   6,612,500 Shares Sold @
    $10 Per Share
   $10 Per Share
            Percent           Percent
            of           of
    Amount
   Assets (3)
   Amount
   Assets (3)
    (Dollars in thousands)
Benjamin Franklin Bancorp:
                                
Total capital shown on financial statements
   $ 102,503       12.36 %   $ 110,013       13.15 %
 
    
 		      
 		      
 		      
 		  
Tier 1 leverage capital
     76,965       9.82 %     84,475       10.67 %
Tier 1 leverage requirement
     31,361       4.00 %     31,661       4.00 %
 
    
 		      
 		      
 		      
 		  
Excess capital
   $ 45,604       5.82 %   $ 52,814       6.67 %
 
    
 		      
 		      
 		      
 		  
Tier 1 risk-based capital
     76,965       15.90 %     84,475       17.40 %
Tier 1 risk-based requirement(2)
     19,359       4.00 %     19,419       4.00 %
 
    
 		      
 		      
 		      
 		  
Excess capital
   $ 57,606       11.90 %   $ 65,056       13.40 %
 
    
 		      
 		      
 		      
 		  
Total risk-based capital
     81,735       16.89 %     89,245       18.38 %
Total risk-based requirement.
     38,718       8.00 %     38,839       8.00 %
 
    
 		      
 		      
 		      
 		  
Excess capital
   $ 43,017       8.89 %   $ 50,406       10.38 %
 
    
 		      
 		      
 		      
 		  
Benjamin Franklin Bank:
                                
Total capital shown on financial statements
   $ 85,965       10.63 %   $ 87,412       10.78 %
 
    
 		      
 		      
 		      
 		  
Tier 1 leverage capital
     51,427       6.73 %     52,874       6.90 %
Tier 1 leverage requirement
     30,555       4.00 %     30,641       4.00 %
 
    
 		      
 		      
 		      
 		  
Excess capital
   $ 20,872       2.73 %   $ 22,233       2.90 %
 
    
 		      
 		      
 		      
 		  
Tier 1 risk-based capital
     51,427       10.72 %     52,874       11.01 %
Tier 1 risk-based requirement(2)
     19,188       4.00 %     19,205       4.00 %
 
    
 		      
 		      
 		      
 		  
Excess capital
   $ 32,239       6.72 %   $ 33,669       7.01 %
 
    
 		      
 		      
 		      
 		  
Total risk-based capital
     56,197       11.72 %     57,644       12.01 %
Total risk-based requirement
     38,376       8.00 %     38,411       8.00 %
 
    
 		      
 		      
 		      
 		  
Excess capital
   $ 17,821       3.72 %   $ 19,233       4.01 %
 
    
 		      
 		      
 		      
 		  

(1)   Pro forma capital compliance figures shown for Benjamin Franklin Bancorp and Benjamin Franklin Bank.
 
(2)   If Benjamin Franklin Bancorp receives orders for fewer than 4,250,000 shares, Benjamin Franklin Bancorp may apply up to 2,082,500 unsubscribed shares toward the merger consideration to be paid to Chart Bank stockholders, but only in order to issue sufficient shares to achieve this minimum number. If the full 2,082,500 shares are applied in this manner, then Benjamin Franklin Bancorp would contribute to Benjamin Franklin Bank 90% (rather than 25%, as otherwise planned) of the cash proceeds of the offering remaining after providing for offering expenses, the cash consideration in the acquisition and the loan to the employee stock ownership plan, and the resulting pro forma regulatory capital ratios for Benjamin Franklin Bancorp and Benjamin Franklin Bank as of September 30, 2004 would be as follows:
                                 
    Benjamin Franklin Bancorp
   Benjamin Franklin Bank
(Dollars in thousands)
   Capital
   Ratio
   Capital
   Ratio
Total capital per financial statements
   $ 68,679       8.63 %   $ 75,541       9.47 %
Tier 1 leverage capital
     43,141       5.75 %     41,003       5.45 %
Tier 1 risk-based capital
     43,141       9.04 %     41,003       8.59 %
Total risk-based capital
     47,911       10.04 %     45,773       9.59 %

(3)   Adjusted total or adjusted risk-weighted assets, as appropriate. Pro forma adjusted risk-weighted assets assume that funds infused into Benjamin Franklin Bank are held in assets that carry a risk-weighting of 20.0%.

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CAPITALIZATION

     The following table presents the historical capitalization of Benjamin Franklin Bancorp and Chart Bank at September 30, 2004, and the approximate pro forma consolidated capitalization of Benjamin Franklin Bancorp after giving effect to the conversion and the Chart Bank acquisition.

                                                         
                        Benjamin Franklin Bancorp
                    Benjamin
Franklin		   Pro Forma based upon a sale at $10 per share
    Benjamin           Bancorp                           Maximum as
    Franklin           Pro Forma   Minimum   Midpoint   Maximum   adjusted
    Bancorp   Chart Bank   Consolidated   4,250,000   5,000,000   5,750,000   6,612,500
    Historical   Historical   Pre-   Price of $10   Price of $10   Price of $10   Price of $10
    Capitalization
   Capitalization
   Conversion(1)
   per share
   per share
   per share
   per share (2)
    (Dollars in thousands)
Deposits (3)
   $ 399,562     $ 215,972     $ 616,237     $ 616,237     $ 616,237     $ 616,237     $ 616,237  
Borrowings(4)
     75,000       22,000       96,971       96,971       96,971       96,971       96,971  
Subordinated Debt
     9,000       —       9,000       9,000       9,000       9,000       9,000  
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		  
Total deposits and borrowed funds
   $ 483,562     $ 237,972     $ 722,208     $ 722,208     $ 722,208     $ 722,208     $ 722,208  
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		  
Stockholders’ equity:
                                                        
Common Stock, no par value, 75 million shares authorized; shares to be issued as reflected
   $ —     $ 1,420     $ —     $ —     $ —     $ —     $ —  
Additional paid-in capital
     —       11,575       24,016       68,362       76,394       83,825       92,370  
Retained earnings(5)
     32,620       4,524       30,652       30,652       30,652       30,652       30,652  
Less expense of contribution to foundation (6)
     —       —       —       (3,400 )     (4,000 )     (4,000 )     (4,000 )
Plus: tax benefit of contribution to foundation (7)
     —       —       —       1,224       1,440       1,440       1,440  
Accumulated other comprehensive income (loss)
     (2,034 )     27       (2,034 )     (2,034 )     (2,034 )     (2,034 )     (2,034 )
Less: common stock acquired by ESOP (8)
     —       —       —       (3,672 )     (4,320 )     (4,920 )     (5,610 )
Less: common stock acquired by stock-based incentive plan (9)
     —       —       —       (1,836 )     (2,160 )     (2,460 )     (2,805 )
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		  
Total stockholders’ equity
   $ 30,586     $ 17,546     $ 52,634     $ 89,296     $ 95,972     $ 102,503     $ 110,013  
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		  

(1)   Reflects the pro forma impact of the acquisition of Chart Bank, with the stock portion of the purchase price paid in newly issued shares of Benjamin Franklin Bancorp at a price of $10 per share and the purchase accounting mark-to-market adjustments required to adjust the deposits and borrowings of Chart Bank to market values. Additional paid-in capital reflects the issuance of $2,401,575 shares of common stock in the acquisition of Chart Bank. See footnote 11 to the pro forma balance sheets on pages [#]-[#] for the assumptions as to cash consideration and expenses in the acquisition.
 
(2)   As adjusted to give effect to an increase in the number of shares which could occur due to an increase in the offering range up to approximately 15.0% to reflect changes in market and financial conditions before the conversion is completed.
 
(3)   Does not reflect withdrawals from deposit accounts for the purchase of common stock in the conversion. Such withdrawals would reduce pro forma deposits by the amount of such withdrawals.
 
(4)   Pro forma borrowings reflect the employee stock ownership plan loan funded internally and eliminated in consolidation, but do not reflect the possible repayment of certain Federal Home Loan Bank of Boston borrowings after completion of the conversion.
 
(5)   The retained earnings of Benjamin Franklin Bancorp will be substantially restricted after the conversion. See “The Conversion and the Offering—Liquidation Rights” on page [#] and “Regulation and Supervision” on page [#].
 
(6)   Represents the pre-tax expense of the contribution of common stock to the Benjamin Franklin Bank Charitable Foundation.
 
(7)   Represents the tax benefit of the contribution of common stock in the Benjamin Franklin Bank Charitable Foundation based on an estimated tax rate of 36.0%.
 
(8)   Assumes that 8.0% of the common stock issued in the offering including shares contributed to the Benjamin Franklin Bank Charitable Foundation (but excluding shares to be issued to Chart Bank stockholders), will be acquired by the employee stock ownership plan. The common stock acquired by the employee stock ownership plan is reflected as a reduction in stockholders’ equity.
 
(9)   Gives effect to the stock-based incentive plan that Benjamin Franklin Bancorp expects to adopt after the conversion and Chart Bank acquisition and present to stockholders for approval at a meeting of stockholders to be held at least six months after conversion and the acquisition are completed. No shares will be purchased by the stock-based incentive plan in the conversion, and such plan cannot purchase any shares until stockholder approval has been obtained. If the stock-based incentive plan is approved by the Benjamin Franklin Bancorp stockholders, the plan intends to acquire an amount of common stock equal to 4.0% of the shares of common stock sold in the offering including shares contributed to the Benjamin Franklin Bank Charitable Foundation, but excluding shares to be issued to Chart Bank stockholders. The table assumes that stockholder approval has been obtained and that such shares are purchased in the open market at $10 per share. The common stock so acquired by the stock-based incentive plan is reflected as a reduction of stockholders’ equity. If the shares are purchased at prices higher or lower than the initial price of $10 per share, such purchases would have a greater or lesser impact, respectively, on stockholders’ equity. If the stock-based incentive plan purchases authorized but unissued from Benjamin Franklin Bancorp, such issuance would dilute the voting interests of existing stockholders by approximately 2.7% if 5,000,000 shares were sold in the conversion. See “Management of Benjamin Franklin Bancorp and Benjamin Franklin Bank—Benefit Plans—Stock-Based Incentive Plan” on page [#].

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PRO FORMA DATA

Pro Forma Unaudited Financial Statements Giving Effect to Conversion and Acquisition

          The following Pro Forma Unaudited Consolidated Balance Sheets at September 30, 2004 and December 31, 2003, and the Pro Forma Unaudited Consolidated Statements of Income for the nine months ended September 30, 2004 and the year ended December 31, 2003 give effect to the proposed conversion and the Chart Bank acquisition based on the assumptions set forth below. The pro forma unaudited financial statements are based on the unaudited consolidated financial statements of Benjamin Franklin Bancorp and Chart Bank as of and for the nine months ended September 30, 2004 and the audited consolidated financial statements of Benjamin Franklin Bancorp and Chart Bank as of and for the year ended December 31, 2003. The pro forma unaudited financial statements give effect to the conversion and the acquisition using purchase accounting as required by accounting principles generally accepted in the United States.

          Chart Bank stockholders will receive in the acquisition either $30.75 in cash or 3.075 shares of Benjamin Franklin Bancorp common stock for each share of Chart Bank stock held by them, with 45.0% of the aggregate consideration to be paid in cash and 55.0% of the aggregate consideration to be paid in common stock. The purchase price for purposes of the pro forma presentation for Chart Bank was calculated as follows:

         
    As of September 30, 2004
    (Dollars in thousands)
Net assets acquired
   $ 17,546  
Fair value adjustments:
        
Estimated non-tax deductible merger costs remaining at September 30, 2004
     (983 )
Estimated tax deductible capitalized merger expenses
     (3,091 )
Loans(1)
     299  
Deposits(1)
     (703 )
Borrowings(1)
     29  
Fixed assets(2)
     427  
Core deposit intangible asset(3)
     3,799  
Tax impact of purchase accounting adjustments
     (274 )
Goodwill
     28,435  
 
    
 		  
Purchase price (net of tax effect of cashing out Chart Bank options)
     45,484  
Tax effect of cashing out Chart Bank options
     1,023  
 
    
 		  
Purchase price
   $ 46,508  
 
    
 		  

(1)   Loans, CDs and borrowing adjustments reflect the market value adjustment assigned to each class of these items. Market value adjustments are calculated using portfolio balances, portfolio rates and market rates as of September 30, 2004. Each adjustment was determined using present value analysis, discounting the difference between market rates of interest and portfolio rates of interest to present value over the contractual or estimated lives of the respective assets and liabilities. Cash flows were discounted at the estimated risk-adjusted market rate. Fair value adjustments are amortized using the interest method over the contractual or estimated lives of the respective assets and liabilities.
 
(2)   Fixed asset adjustments based on estimated current market values of acquired fixed assets. Fixed asset adjustments are amortized as depreciation expense over the estimated remaining lives of the fixed assets.
 
(3)   Core deposit intangibles reflect the present value benefit to Benjamin Franklin Bancorp of utilizing the acquired core deposits as a funding source relative to wholesale funding costs based on the rates of Federal Home Loan Bank advances. The core deposit intangible is calculated using deposit balances and interest rates as of September 30, 2004. Costs of the acquired core deposits include interest costs, plus estimated operating expenses, less estimated non-interest income to be derived from the core deposits. Acquired core deposits are projected to decay based on assumptions promulgated by the Office of Thrift Supervision. The yield benefit for each period is discounted to present value using a weighted average cost of capital. The core deposit intangibles are amortized over the estimated lives of the core deposits using the double declining balance accelerated amortization schedule.

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          The pro forma adjustments in the tables assume the sale of 4,250,000 shares and 6,612,500 shares, respectively, in the offering at a price of $10 per share, which is the minimum and maximum, as adjusted, of the offering range, respectively. In addition, the pro forma adjustments in the tables assume the issuance of 2,401,575 shares to Chart Bank stockholders in the acquisition, and the contribution of 340,000 and 400,000 shares, respectively, of Benjamin Franklin Bancorp common stock to the Benjamin Franklin Bank Charitable Foundation. The number of shares issued to Chart Bank stockholders may vary if Chart Bank options are exercised prior to closing. The net proceeds are based upon the following assumptions:

•   Benjamin Franklin Bancorp will sell all shares of common stock offered in the conversion in the subscription offering;
 
•   Benjamin Franklin Bancorp’s employee stock ownership plan will purchase 8.0% of the shares of common stock issued in the offering, including shares contributed to the Benjamin Franklin Bank Charitable Foundation. The employee stock ownership plan is assumed to be funded internally with a loan from Benjamin Franklin Bancorp;
 
•   Benjamin Franklin Bancorp will make a contribution to the Benjamin Franklin Bank Charitable Foundation amounting to 340,000 and 400,000 shares, respectively, at the minimum and maximum, as adjusted, of its common stock with an assumed value of $10 per share;
 
•   Fixed expenses of the offering, other than the fees to be paid to Ryan Beck, are estimated to be $1.1 million; and
 
•   Ryan Beck will receive reimbursement of legal fees and other expenses in the amount of $100,000, in addition to fees equal to 1.0% of the aggregate purchase price of the shares of stock sold in the offering, excluding any shares purchased by any employee benefit plans, purchased by any of Benjamin Franklin Bancorp’s directors, officers or employees or members of their immediate families, issued to the Benjamin Franklin Bank Charitable Foundation or issued to the Chart Bank stockholders in the acquisition.

          The expenses of the conversion and the acquisition may vary from those estimated, and the fees paid to Ryan Beck will vary from the amounts estimated if the amount of shares of Benjamin Franklin Bancorp common stock sold varies from the amounts assumed above or if a syndicated community offering becomes necessary. Additionally, certain one-time charges to operating results are expected to occur following the conversion and the acquisition, which expenses are currently estimated to be approximately $3.1 million, pre-tax. These items, net of income tax effects, are shown as a reduction in stockholders’ equity in the balance sheets but are not shown as a reduction in net income for the periods shown in the income statements.

          Pro forma net income has been calculated for the nine months ended September 30, 2004 and for the year ended December 31, 2003 for Benjamin Franklin Bancorp and Chart Bank as if the shares of Benjamin Franklin Bancorp common stock to be issued in the offering had been sold and the shares issued to Chart Bank stockholders happened as of the beginning of the first period presented. Pro forma net income has also been calculated assuming the acquisition of Chart Bank had happened as of the beginning of each period. Pro forma merger adjustments to net income include entries to reflect the estimated difference between contractual yields and costs on financial assets and liabilities and comparable market yields and costs and the amortization of identifiable intangible assets created in the acquisition. Excluded from the calculation of pro forma net income are any adjustments to reflect the estimated interest income to be earned on the net proceeds of the offering, the estimated interest expense to be incurred on the cash required to fund the acquisition of Chart Bank and related expenses, and other estimated expense reductions from consolidating the operations of Chart Bank with those of Benjamin

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Franklin Bancorp. Such entries will be recorded as incurred, are non-recurring, and are thus not reflected in the calculations of pro forma income.

          The pro forma unaudited consolidated statements of financial condition assume the conversion and the acquisition were consummated as of September 30, 2004 and as of the year ended December 31, 2003, respectively. The pro forma unaudited consolidated balance sheets reflect the estimated impact of the offering on Benjamin Franklin Bancorp and the estimated merger adjustments to reflect the acquisition of Chart Bank. Estimated merger adjustments reflect the application of the purchase method of accounting, including adjustments to reflect the difference between historical carrying values and estimated market values for financial assets and liabilities and fixed assets and the creation of intangible assets. The pro forma stockholders’ equity represents the combined book value of Benjamin Franklin Bancorp and Chart Bank, as adjusted for the offering and the acquisition, computed in accordance with generally accepted accounting principles used in the United States. This amount is not intended to represent fair market value nor does it represent amounts, if any, that would be available for distribution to stockholders in the event of liquidation.

          The pro forma unaudited financial statements are provided for informational purposes only. The pro forma financial information presented is not necessarily indicative of the market value of Benjamin Franklin Bancorp or the actual results that would have been achieved had the conversion and the acquisition been consummated on September 30, 2004 or December 31, 2003 or at the beginning of the periods presented, and is not indicative of future results. The pro forma unaudited financial statements should be read in conjunction with the consolidated financial statements and the notes thereto of Benjamin Franklin Bancorp and Chart Bank contained elsewhere in this prospectus.

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          September 30, 2004 Pro Forma Balance Sheet—Minimum of Offering Range. The following table presents pro forma balance sheet information at September 30, 2004 for Benjamin Franklin Bancorp and Chart Bank assuming the sale of 4,250,000 shares at the minimum of the offering range.

                                                 
    Benjamin           Benjamin            
    Franklin   Pro Forma   Franklin            
    Bancorp   Conversion   Bancorp as   Chart Bank   Pro Forma Merger   Pro Forma
    Historical
   Adjustments (1)
   Converted
   Historical
   Adjustments(2)
   Consolidated
    (Dollars in thousands)
Assets
                                                
Cash and cash equivalents
   $ 15,126     $ —     $ 15,126     $ 38,773       —     $ 53,899  
Securities available for sale, at fair value
     94,423       35,438 (3)     129,861       3,669       (28,082 )(11)     105,448  
Securities held to maturity, at amortized cost
     266       —       266       31,826       —       32,092  
Loans, net
     375,516       —       375,516       175,572       299 (12)     551,387  
Restricted equity securities, at cost
     6,862       —       6,862       1,662       —       8,524  
Premises and equipment, net
     11,280       —       11,280       2,171       427 (13)     13,878  
Goodwill
     4,248       —       4,248       —       28,435 (14)     32,683  
Core deposit intangible
     91       —       91       —       3,799 (15)     3,890  
Other amortizing intangible assets
     720       —       720       —       —       720  
Other assets
     9,399       1,224 (4)     10,623       2,588       298 (16)     13,509  
 
    
 		      
 		      
 		      
 		      
 		      
 		  
Total assets
   $ 517,931     $ 36,662     $ 554,593     $ 256,261     $ 5,176     $ 816,030  
 
    
 		      
 		      
 		      
 		      
 		      
 		  
Liabilities
                                                
Deposits
   $ 399,562     $ —     $ 399,562     $ 215,972     $ 703 (17)   $ 616,237  
FHLB advances and other borrowings
     75,000       — (5)     75,000       22,000       (29 )(18)     96,971  
Other liabilities
     3,783       —       3,783       743       —       4,526  
Subordinated debt
     9,000       —       9,000       —       —       9,000  
 
    
 		      
 		      
 		      
 		      
 		      
 		  
Total liabilities
     487,345       —       487,345       238,715       674       726,734  
 
    
 		      
 		      
 		      
 		      
 		      
 		  
Stockholder’s equity
                                             —  
Common Stock
     —       — (6)     —       1,420       (1,420 )(19)     —  
Additional paid-in capital
     —       44,346 (7)     44,346       11,575       12,441 (20)     68,362  
Retained earnings
     32,620       (2,176 )(8)     30,444       4,524       (6,492 )(21)     28,476  
Employee stock ownership plan shares
     —       (3,672 )(9)     (3,672 )     —       —       (3,672 )
Stock-based incentive plan shares
     —       (1,836 )(10)     (1,836 )     —       —       (1,836 )
Accumulated other comprehensive (loss) income
     (2,034 )     —       (2,034 )     27       (27 )(22)     (2,034 )
 
    
 		      
 		      
 		      
 		      
 		      
 		  
Total stockholders’ equity
     30,586       36,662       67,248       17,546       4,502       89,296  
 
    
 		      
 		      
 		      
 		      
 		      
 		  
Total liabilities and stockholders’ equity.
   $ 517,931     $ 36,662     $ 554,593     $ 256,261     $ 5,176     $ 816,030  
 
    
 		      
 		      
 		      
 		      
 		      
 		  

(1)   Shows the effect of the mutual-to-stock conversion of Benjamin Franklin Bancorp, assuming gross proceeds of $42.5 million, the minimum of the offering range, offering expenses of $1.6 million, a contribution to the Benjamin Franklin Bank Charitable Foundation of $3.4 million of common stock, and establishment of an employee stock ownership plan and a stock-based incentive plan that will acquire 8.0% and 4.0%, respectively, of the number of shares issued in the offering including the shares issued to the Benjamin Franklin Bank Charitable Foundation. The employee stock ownership plan is assumed to purchase its shares in the offering and in open market purchases. The stock-based incentive plan will purchase shares in the open market after receiving stockholder approval to adopt the plan. Open market purchases by the employee stock ownership plan and stock-based incentive plan are assumed at $10 per share. The reduction in retained earnings reflects the one-time expense of funding the Benjamin Franklin Bank Charitable Foundation net of a deferred tax asset.
 
(2)   Reflects the purchase accounting and acquisition adjustments related to the acquisition of Chart Bank for a price of $30.75 per share in cash and newly issued common stock.
 
(3)   Net cash proceeds raised in the conversion equal to gross proceeds of $42.5 million, less offering expenses of $1.6 million, the purchase of shares by the employee stock ownership plan of $3.7 million, and the assumed purchase of the stock-based incentive plan shares of $1.8 million.
 
(4)   Deferred tax asset resulting from funding the Benjamin Franklin Bank Charitable Foundation based on marginal tax rate of 36.0%.
 
(5)   The employee stock ownership plan loan is assumed to be funded internally with a loan from Benjamin Franklin Bancorp, thus no borrowing liability will be recorded on the consolidated balance sheet of Benjamin Franklin Bancorp.
 
(6)   No par value common stock.

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(7)   Net proceeds of stock offering $40.9 million plus shares contributed to the Benjamin Franklin Bank Charitable Foundation of $3.4 million.
 
(8)   After-tax impact to retained earnings from the $3.4 million expense for funding the Benjamin Franklin Bank Charitable Foundation based on a marginal tax rate of 36.0%.
 
(9)   Contra-equity account established to reflect the unallocated shares in the employee stock ownership plan, anticipated to purchase 8.0% of the shares issued in the offering (including shares contributed to the Benjamin Franklin Bank Charitable Foundation).
 
(10)   Contra-equity account established to reflect the unvested shares in the stock-based incentive plan equal to 4.0% of offering plus foundation shares.
 
(11)   Includes the cash portion of the merger consideration paid to Chart Bank in the amount of $21.5 million (which assumes that all Chart Bank options are cashed out at the closing and factors in the tax-deductibility of the option cash-out), estimated non-tax deductible transaction costs of $0.9 million remaining to be paid at September 30, 2004, estimated tax deductible one time acquisition costs of $3.1 million, and estimated $3.1 million of one time expenses that will be incurred by Benjamin Franklin Bancorp to consolidate Chart Bank, net of $0.5 million of cash received from return of the Chart Bank Cooperative Central Bank deposit.
 
(12)   Yield adjustment to reflect the difference between portfolio yields and market rates as of September 30, 2004 for loans acquired in the acquisition. Yield adjustments were calculated using present value analysis as follows: (a) the acquired loan portfolio was segregated into pools of similar loans; (b) cash flow projections were prepared for each loan pool based interest rates, balances, remaining terms to maturity, and estimated prepayment speeds for each pool; (c) cash flows were discounted to present value using risk adjusted discount rates for comparable loans; and (d) the resulting difference between the present value of future cash flows for each pool and the corresponding principal balance was the yield adjustment. Yield adjustments on acquired loans are amortized into interest income using the interest method over the estimated lives of the acquired loans, which range between 0.5 years and 8.3 years, depending upon the type of loan (average is 4.2 years).
 
(13)   Reflects the difference between market values and net book values of fixed assets acquired in the acquisition.
 
(14)   Goodwill is an intangible asset that is not subject to amortization. The goodwill balance will be tested annually for impairment. Goodwill is calculated as:

         
    Chart Bank
    (Dollars in thousands,
    except per share data)
Purchase price per share
   $ 30.75  
Number of shares acquired
     1,420,000  
Number of options acquired
     137,000  
Average exercise price of options
   $ 10.00  
Cost of purchasing shares
   $ 43,665  
Cost of purchasing options
     2,843  
Tax effect of purchasing options
     (1,024 )
 
    
 		  
Purchase price (net of tax effect of purchasing options)
     45,484  
Less: acquired stockholders’ equity
     (17,546 )
Plus: estimated non-tax deductible transaction costs
     983  
Plus: taxable purchase accounting adjustments
        
Estimated tax deductible expenses (pretax)
     3,091  
Yield adjustment for acquired CDs
     703  
Yield adjustment for acquired borrowings
     (29 )
Yield adjustment for acquired loans
     (299 )
Core deposit intangible
     (3,799 )
Market value adjustment for fixed assets
     (427 )
Tax effect at 36.0% marginal tax rate
     274  
 
    
 		  
Goodwill
   $ 28,435  
 
    
 		  

(15)   Core deposit intangible is an identifiable intangible asset representing the economic value of the acquired Chart Bank deposit base, calculated as the present value benefit of funding operations with the acquired deposit base versus using an alternative wholesale funding source. The core deposit intangible asset is amortized into expense on an accelerated basis using the double declining balance method over 8.3 years.
 
(16)   Deferred tax liability of $0.3 million on tax-deductible transaction costs and purchase accounting adjustments (see footnote 14) and deferred tax asset of $1.1 million on one time merger charges (see footnote 21), net of $0.5 million reduction from repayment of Chart Bank Cooperative Central Bank deposit.
 
(17)   Yield adjustment to reflect the difference between portfolio yields and market rates as of September 30, 2004 for time deposits acquired in the acquisition. Yield adjustment is calculated as the difference between the current portfolio balances for time deposits and the present value of projected cash flows related to the time deposits discounted using current market rates. Current market rates were based on average rates paid by institutions competing in the regional market area based on rate surveys on or around September 30, 2004. The yield adjustment for time deposits will be accreted into income using the interest method over the lives of the acquired time deposits based on their monthly maturities (5 years).
 
(18)   Yield adjustment to reflect the difference between portfolio yields and market rates as of September 30, 2004 for borrowings acquired in the acquisition. Yield adjustment is calculated as the difference between the current portfolio balance for borrowings and the present value of projected cash flows related to the borrowings discounted using current market rates. Current market rates were based on rates offered by the Federal Home Loan Bank of Boston as of September 30, 2004. The yield adjustment for borrowings will be amortized into expense using the interest method over the lives of the acquired borrowings based on their monthly maturities (4 years).
 
(19)   Eliminate Chart Bank common stock par value. Newly issued shares of Benjamin Franklin Bancorp have no par value.
 
(20)   Calculate as follows:

         
    (Dollars in thousands)
Eliminate existing Chart Bank paid-in capital
   $ (11,575 )
Common stock (par value) issued in acquisition
     24,016  
 
    
 		  
Adjustment to paid-in capital
   $ 12,441  
 
    
 		  

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(21)   Calculate as follows:

         
    (Dollars in thousands)
Eliminate existing Chart Bank retained earnings
   $ (4,524 )
One-time merger charges incurred:
        
Restructure FHLB advances and conversion of accounts
     (3,075 )
Tax effect at marginal rate of 36.0%
     1,107  
 
    
 		  
Adjustment to retained earnings
   $ (6,492 )
 
    
 		  

(22)   Calculate to eliminate the capital account entries of Chart Bank pursuant to purchase accounting.

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          September 30, 2004 Pro Forma Balance Sheet—Maximum, as Adjusted, of Offering Range. The following table presents pro forma balance sheet information at September 30, 2004 for Benjamin Franklin Bancorp and Chart Bank assuming the sale of 6,612,500 shares at the maximum, as adjusted, of the offering range.

                                                 
    Benjamin           Benjamin            
    Franklin   Pro Forma   Franklin            
    Bancorp   Conversion   Bancorp as   Chart Bank   Pro Forma Merger   Pro Forma
    Historical
   Adjustments (1)
   Converted
   Historical
   Adjustments (2)
   Consolidated
    (Dollars in thousands)
Assets
                                                
Cash and cash equivalents
   $ 15,126     $ —     $ 15,126     $ 38,773     $ —     $ 53,899  
Securities available for sale, at fair value
     94,423       55,939 (3)     150,362       3,669       (28,082 )(11)     125,949  
Securities held to maturity, at amortized cost
     266       —       266       31,826       —       32,092  
Loans, net
     375,516       —       375,516       175,572       299 (12)     551,387  
Restricted equity securities, at cost
     6,862       —       6,862       1,662       —       8,524  
Premises and equipment, net
     11,280       —       11,280       2,171       427 (13)     13,878  
Goodwill
     4,248       —       4,248       —       28,435 (14)     32,683  
Core deposit intangible
     91       —       91       —       3,799 (15)     3,890  
Other amortizing intangible assets
     720       —       720       —       —       720  
Other assets
     9,399       1,440 (4)     10,839       2,588       298 (16)     13,725  
 
    
 		      
 		      
 		      
 		      
 		      
 		  
Total assets
   $ 517,931     $ 57,379     $ 575,310     $ 256,261     $ 5,176     $ 836,747  
 
    
 		      
 		      
 		      
 		      
 		      
 		  
Liabilities
                                                
Deposits
   $ 399,562     $ —     $ 399,562     $ 215,972     $ 703 (17)   $ 616,237  
FHLB advances and other borrowings
     75,000       — (5)     75,000       22,000       (29 )(18)     96,971  
Other liabilities
     3,783       —       3,783       743       —       4,526  
Subordinated debt
     9,000       —       9,000       —       —       9,000  
 
    
 		      
 		      
 		      
 		      
 		      
 		  
Total liabilities
     487,345       —       487,345       238,715       674       726,734  
 
    
 		      
 		      
 		      
 		      
 		      
 		  
Stockholder’s equity
                                                
Common Stock
     —       — (6)             1,420       (1,420 )(19)     —  
Additional paid-in capital
     —       68,354 (7)     68,354       11,575       12,441 (20)     92,370  
Retained earnings
     32,620       (2,560 )(8)     30,060       4,524       (6,492 )(21)     28,092  
Employee stock ownership plan shares
     —       (5,610 )(9)     (5,610 )     —       —       (5,610 )
Stock-based incentive plan shares
     —       (2,805 )(10)     (2,805 )     —       —       (2,805 )
Accumulated other comprehensive (loss) income.
     (2,034 )     —       (2,034 )     27       (27 )(22)     (2,034 )
 
    
 		      
 		      
 		      
 		      
 		      
 		  
Total stockholders’ equity
     30,586       57,379       87,965       17,546       4,502       110,013  
 
    
 		      
 		      
 		      
 		      
 		      
 		  
Total liabilities and stockholders’ equity.
   $ 517,931     $ 57,379     $ 575,310     $ 256,261     $ 5,176     $ 836,747  
 
    
 		      
 		      
 		      
 		      
 		      
 		  

(1)   Shows the effect of the mutual-to-stock conversion of Benjamin Franklin Bancorp, assuming gross proceeds of $66.1 million, the maximum, as adjusted, offering expenses of $1.8 million, a contribution to the Benjamin Franklin Bank Charitable Foundation of $4.0 million of common stock, and establishment of an employee stock ownership plan and the stock-based incentive plan that will acquire 8.0% and 4.0%, respectively, of the number of shares issued in the offering including the shares issued to the Benjamin Franklin Bank Charitable Foundation. The employee stock ownership plan will purchase its shares in the offering and in open market purchases. The stock-based incentive plan will purchase shares in the open market after receiving stockholder approval to adopt the plan. Open market purchases by the employee stock ownership plan and stock-based incentive plan are assumed at $10 per share. The reduction in retained earnings reflects the one-time expense of funding the Benjamin Franklin Bank Charitable Foundation net of a deferred tax asset.
 
(2)   Reflects the purchase accounting and acquisition adjustments related to the acquisition of Chart Bank for a price of $30.75 per share in cash and newly issued common stock.
 
(3)   Net cash proceeds raised in the conversion equal to gross proceeds of $66.1 million, less offering expenses of $1.8 million, the purchase of shares by the employee stock ownership plan of $5.6 million, and the assumed purchase of the stock-based incentive plan shares of $2.8 million.
 
(4)   Deferred tax asset resulting from funding the Benjamin Franklin Bank Charitable Foundation based on marginal tax rate of 36.0%.
 
(5)   The employee stock ownership plan loan is assumed to be funded internally with a loan from Benjamin Franklin Bancorp, thus no borrowing liability will be recorded on the consolidated balance sheet of Benjamin Franklin Bancorp.
 
(6)   No par value common stock.
 
(7)   Net proceeds of stock offering $64.4 million plus shares contributed to the Benjamin Franklin Bank Charitable Foundation of $4.0 million.

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(8)   After-tax impact to retained earnings from the $4.0 million expense for funding the Benjamin Franklin Bank Charitable Foundation based on a marginal tax rate of 36.0%.
 
(9)   Contra-equity account established to reflect the unallocated shares in the employee stock ownership plan, anticipated to purchase 8.0% of the shares issued in the offering (including shares contributed to the Benjamin Franklin Bank Charitable Foundation).
 
(10)   Contra-equity account established to reflect the unvested shares in the stock-based incentive plan equal to 4.0% of offering plus foundation shares.
 
(11)   Includes the cash portion of the merger consideration paid to Chart Bank in the amount of $21.5 million (which assumes that all Chart Bank options are cashed out at the closing and factors in the tax-deductibility of the option cash-out), estimated non-tax deductible transaction costs of $0.9 million remaining to be paid at September 30, 2004, estimated tax deductible one time acquisition costs of $3.1 million, and estimated $3.1 million of one time expenses that will be incurred by Benjamin Franklin Bancorp to consolidate Chart Bank, net of $0.5 million of cash received from return of the Chart Bank Cooperative Central Bank deposit.
 
(12)   Yield adjustment to reflect the difference between portfolio yields and market rates as of September 30, 2004 for loans acquired in the acquisition. Yield adjustments were calculated using present value analysis as follows: (a) the acquired loan portfolio was segregated into pools of similar loans; (b) cash flow projections were prepared for each loan pool based interest rates, balances, remaining terms to maturity, and estimated prepayment speeds for each pool; (c) cash flows were discounted to present value using risk adjusted discount rates for comparable loans; and (d) the resulting difference between the present value of future cash flows for each pool and the corresponding principal balance was the yield adjustment. Yield adjustments on acquired loans are amortized into interest income using the interest method over the estimated lives of the acquired loans, which range between 0.5 years and 8.3 years, depending upon the type of loan (average is 4.2 years).
 
(13)   Reflects the difference between market values and net book values of fixed assets acquired in the acquisition.
 
(14)   Goodwill is an intangible asset that is not subject to amortization. The goodwill balance will be tested annually for impairment. Goodwill is calculated as:

         
    Chart Bank
    (Dollars in thousands,
    except per share data)
Purchase price per share
   $ 30.75  
Number of shares acquired
     1,420,000  
Number of options acquired
     137,000  
Average exercise price of options
   $ 10.00  
Cost of purchasing shares
   $ 43,665  
Cost of purchasing options
     2,843  
Tax effect of purchasing options
     (1,024 )
 
    
 		  
Purchase price (net of tax effect of purchasing options)
     45,484  
Less: acquired stockholders’ equity
     (17,546 )
Plus: estimated non-tax deductible transaction costs
     983  
Plus: taxable purchase accounting adjustments
        
Estimated tax deductible expenses (pretax)
     3,091  
Yield adjustment for acquired CDs
     703  
Yield adjustment for acquired borrowings
     (29 )
Yield adjustment for acquired loans
     (299 )
Core deposit intangible
     (3,799 )
Market value adjustment for fixed assets
     (427 )
Tax effect at 36.0% marginal tax rate
     274  
 
    
 		  
Goodwill
   $ 28,435  
 
    
 		  

(15)   Core deposit intangible is an identifiable intangible asset representing the economic value of the acquired Chart Bank deposit base, calculated as the present value benefit of funding operations with the acquired deposit base versus using an alternative wholesale funding source. The core deposit intangible asset is amortized into expense on an accelerated basis using the double declining balance method over 8.3 years.
 
(16)   Deferred tax liability of $0.3 million on tax-deductible transaction costs and purchase accounting adjustments (see footnote 14) and deferred tax asset of $1.1 million on one time merger charges (see footnote 21), net of $0.5 million reduction from repayment of Chart Bank Cooperative Central Bank deposit.
 
(17)   Yield adjustment to reflect the difference between portfolio yields and market rates as of September 30, 2004 for time deposits acquired in the acquisition. Yield adjustment is calculated as the difference between the current portfolio balances for time deposits and the present value of projected cash flows related to the time deposits discounted using current market rates. Current market rates were based on average rates paid by institutions competing in the regional market area based on rate surveys on or around September 30, 2004. The yield adjustment for time deposits will be accreted into income using the interest method over the lives of the acquired time deposits based on their monthly maturities (5 years).
 
(18)   Yield adjustment to reflect the difference between portfolio yields and market rates as of September 30, 2004 for borrowings acquired in the acquisition. Yield adjustment is calculated as the difference between the current portfolio balance for borrowings and the present value of projected cash flows related to the borrowings discounted using current market rates. Current market rates were based on rates offered by the Federal Home Loan Bank of Boston as of September 30, 2004. The yield adjustment for borrowings will be amortized into expense using the interest method over the lives of the acquired borrowings based on their monthly maturities (4 years).
 
(19)   Eliminate Chart Bank common stock par value. Newly issued shares of Benjamin Franklin Bancorp have no par value.
 
(20)   Calculate as follows:

         
    (Dollars in Thousands)
Eliminate existing Chart Bank paid-in capital
   $ (11,575 )
Common stock (par value) issued in acquisition
     24,016  
 
    
 		  
Adjustment to paid-in capital
   $ 12,441  
 
    
 		  

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(21)   Calculate as follows:

         
    (Dollars in thousands)
Eliminate existing Chart Bank retained earnings
   $ (4,524 )
One-time merger charges incurred:
        
Restructure FHLB advances and conversion of accounts
     (3,075 )
Tax effect at marginal rate of 36.0%
     1,107  
Adjustment to retained earnings
   $ (6,492 )
 
    
 		  

(22)   Calculate to eliminate the capital account entries of Chart Bank pursuant to purchase accounting.

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     December 31, 2003 Pro Forma Balance Sheet—Minimum of Offering Range. The following table presents pro forma balance sheet information at December 31, 2003 for Benjamin Franklin Bancorp and Chart Bank assuming the sale of 4,250,000 shares at the minimum of the offering range.

                                                 
    Benjamin           Benjamin            
    Franklin   Pro Forma   Franklin            
    Bancorp   Conversion   Bancorp as   Chart Bank   Pro Forma Merger   Pro Forma
    Historical
   Adjustments (1)
   Converted
   Historical
   Adjustments (2)
   Consolidated
    (Dollars in thousands)
Assets
                                                
Cash and cash equivalents
   $ 35,485     $ —     $ 35,485     $ 34,874     $ —     $ 70,359  
Securities available for sale, at fair value
     102,646       35,438 (3)     138,084       5,404       (28,082 ) (11)     115,406  
Securities held to maturity, at amortized cost
     386       —       386       23,965       —       24,351  
Loans, net
     288,862       —       288,862       139,890       299 (12)     429,051  
Restricted equity securities, at cost
     7,222       —       7,222       1,060       —       8,282  
Premises and equipment, net
     11,199       —       11,199       2,400       427 (13)     14,026  
Goodwill
     4,248       —       4,248       —       28,582 (14)     32,830  
Core deposit intangible
     226       —       226       —       3,799 (15)     4,025  
Other amortizing intangible assets
     862       —       862       —       —       862  
Other assets
     7,708       1,224 (4)     8,932       2,261       298 (16)     11,491  
 
    
 		      
 		      
 		      
 		      
 		      
 		  
Total assets
   $ 458,844     $ 36,662     $ 495,506     $ 209,854     $ 5,323     $ 710,683  
 
    
 		      
 		      
 		      
 		      
 		      
 		  
Liabilities
                                                
Deposits
   $ 380,257     $ —     $ 380,257     $ 175,801     $ 703 (17)   $ 556,761  
FHLB advances and other borrowings
     36,000       — (5)     36,000       15,930       (29 ) (18)     51,901  
Other liabilities
     4,286       —       4,286       724       —       5,010  
Subordinated debt
     9,000       —       9,000     $ —       —       9,000  
 
    
 		      
 		      
 		      
 		      
 		      
 		  
Total liabilities
     429,543       —       429,543       192,455       674       622,672  
 
    
 		      
 		      
 		      
 		      
 		      
 		  
Stockholder’s equity
                                                
Common Stock
     —       — (6)     —       1,420       (1,420 )(19)     —  
Additional paid-in capital
     —       44,346 (7)     44,346       11,575       12,441 (20)     68,362  
Retained earnings
     31,308       (2,176 )(8)     29,132       4,337       (6,305 )(21)     27,164  
Employee stock ownership plan shares
     —       (3,672 )(9)     (3,672 )     —       —       (3,672 )
Stock-based incentive plan shares
     —       (1,836 )(10)     (1,836 )     —       —       (1,836 )
Accumulated other comprehensive (loss income
     (2,007 )     —       (2,007 )     67       (67 ) (22)     (2,007 )
 
    
 		      
 		      
 		      
 		      
 		      
 		  
Total stockholders’ equity
     29,301     $ 36,662       65,963       17,399       4,649       88,011  
Total liabilities and stockholders’ equity.
   $ 458,844     $ 36,662     $ 495,506     $ 209,854     $ 5,323     $ 710,683  
 
    
 		      
 		      
 		      
 		      
 		      
 		  

(1)   Shows the effect of the mutual-to-stock conversion of Benjamin Franklin Bancorp, assuming gross proceeds of $42.5 million, the minimum of the offering range, offering expenses of $1.6 million, a contribution to the Benjamin Franklin Bank Charitable Foundation of $3.4 million of common stock, and establishment of an employee stock ownership plan and the stock-based incentive plan that will acquire 8.0% and 4.0%, respectively, of the number of shares issued in the offering including the shares issued to the Benjamin Franklin Bank Charitable Foundation. The employee stock ownership plan will purchase its shares in the offering and in open market purchases. The stock-based incentive plan is assumed to purchase shares in the open market after receiving stockholder approval to adopt the plan. Open market purchases by the employee stock ownership plan and stock-based incentive plan are assumed at $10 per share. The reduction in retained earnings reflects the one-time expense of funding the Benjamin Franklin Bank Charitable Foundation net of a deferred tax asset.
 
(2)   Reflects the purchase accounting and acquisition adjustments related to the acquisition of Chart Bank for a price of $30.75 per share in cash and newly issued common stock.
 
(3)   Net cash proceeds raised in the conversion equal to gross proceeds of $42.5 million, less offering expenses of $1.6 million, the purchase of shares by the employee stock ownership plan of $3.7 million, and the assumed purchase of the stock-based incentive plan shares of $1.8 million.
 
(4)   Deferred tax asset resulting from funding the Benjamin Franklin Bank Charitable Foundation based on marginal tax rate of 36.0%.
 
(5)   The employee stock ownership plan loan is assumed to be funded internally with a loan from Benjamin Franklin Bancorp, thus no borrowing liability will be recorded on the consolidated balance sheet of Benjamin Franklin Bancorp.
 
(6)   No par value common stock.
 
(7)   Net proceeds of stock offering $40.9 million plus shares contributed to the Benjamin Franklin Bank Charitable Foundation of $3.4 million.

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(8)   After-tax impact to retained earnings from the $3.4 million expense for funding the Benjamin Franklin Bank Charitable Foundation based on a marginal tax rate of 36.0%.
 
(9)   Contra-equity account established to reflect the unallocated shares in the employee stock ownership plan, anticipated to purchase 8.0% of the shares issued in the offering (including shares contributed to the Benjamin Franklin Bank Charitable Foundation).
 
(10)   Contra-equity account established to reflect the unvested shares in the stock-based incentive plan equal to 4.0% of offering plus foundation shares.
 
(11)   Includes the cash portion of the merger consideration paid to Chart Bank in the amount of $21.5 million (which assumes that all Chart Bank options are cashed out at the closing and factors in the tax-deductibility of the option cash-out), estimated non-tax deductible transaction costs of $0.9 million remaining to be paid at September 30, 2004, estimated tax deductible one time acquisition costs of $3.1 million, and estimated $3.1 million of one time expenses that will be incurred by Benjamin Franklin Bancorp to consolidate Chart Bank, net of $0.5 million of cash received from return of the Chart Bank Cooperative Central Bank deposit.
 
(12)   Yield adjustment to reflect the difference between portfolio yields and market rates as of September 30, 2004 for loans acquired in the acquisition. Yield adjustments were calculated using present value analysis as follows: (a) the acquired loan portfolio was segregated into pools of similar loans; (b) cash flow projections were prepared for each loan pool based interest rates, balances, remaining terms to maturity, and estimated prepayment speeds for each pool; (c) cash flows were discounted to present value using risk adjusted discount rates for comparable loans; and (d) the resulting difference between the present value of future cash flows for each pool and the corresponding principal balance was the yield adjustment. Yield adjustments on acquired loans are amortized into interest income using the interest method over the estimated lives of the acquired loans, which range between 0.5 years and 8.3 years, depending upon the type of loan (average is 4.2 years).
 
(13)   Reflects the difference between market values and net book values of fixed assets acquired in the acquisition.
 
(14)   Goodwill is an intangible asset that is not subject to amortization. The goodwill balance will be tested annually for impairment. Goodwill is calculated as:
         
    Chart Bank
    (Dollars in thousands,
    except per share data)
Purchase price per share
   $ 30.75  
Number of shares acquired
     1,420,000  
Number of options acquired
     137,000  
Average exercise price of options
   $ 10.00  
Cost of purchasing shares
   $ 43,665  
Cost of purchasing options
     2,843  
Tax effect of purchasing options
     (1,024 )
 
    
 		  
Purchase price (net of tax effect of purchasing options)
     45,484  
Less: acquired stockholders’ equity
     (17,399 )
Plus: estimated non-tax deductible transaction costs
     983  
Plus: taxable purchase accounting adjustments
        
Estimated tax deductible transaction expenses (pre-tax)
     3,091  
Yield adjustment for acquired CDs
     703  
Yield adjustment for acquired borrowings
     (29 )
Yield adjustment for acquired loans
     (299 )
Core deposit intangible
     (3,799 )
Market value adjustment for fixed assets
     (427 )
Tax effect at 36.0% marginal tax rate
     274  
 
    
 		  
Goodwill
   $ 28,582  
 
    
 		  

(15)   Core deposit intangible is an identifiable intangible asset representing the economic value of the acquired Chart Bank deposit base, calculated as the present value benefit of funding operations with the acquired deposit base versus using an alternative wholesale funding source. The core deposit intangible asset is amortized into expense on an accelerated basis using the double declining balance method over 8.3 years.
 
(16)   Deferred tax liability of $0.3 million on tax-deductible transaction costs and purchase accounting adjustments (see footnote 14) and deferred tax asset of $1.1 million on one time merger charges (see footnote 21), net of $0.5 million reduction from repayment of Chart Bank Cooperative Central Bank deposit.
 
(17)   Yield adjustment to reflect the difference between portfolio yields and market rates as of September 30, 2004 for time deposits acquired in the acquisition. Yield adjustment is calculated as the difference between the current portfolio balances for time deposits and the present value of projected cash flows related to the time deposits discounted using current market rates. Current market rates were based on average rates paid by institutions competing in the regional market area based on rate surveys on or around September 30, 2004. The yield adjustment for time deposits will be accreted into income using the interest method over the lives of the acquired time deposits based on their monthly maturities (5 years).
 
(18)   Yield adjustment to reflect the difference between portfolio yields and market rates as of September 30, 2004 for borrowings acquired in the acquisition. Yield adjustment is calculated as the difference between the current portfolio balance for borrowings and the present value of projected cash flows related to the borrowings discounted using current market rates. Current market rates were based on rates offered by the Federal Home Loan Bank of Boston as of September 30, 2004. The yield adjustment for borrowings will be amortized into expense using the interest method over the lives of the acquired borrowings based on their monthly maturities (4 years).
 
(19)   Eliminate Chart Bank common stock par value. Newly issued shares of Benjamin Franklin Bancorp have no par value.
 
(20)   Calculate as follows:

         
    (Dollars in thousands)
Eliminate existing Chart Bank paid-in capital
   $ (11,575 )
Common stock (par value) issued in acquisition
     24,016  
 
    
 		  
Adjustment to paid-in capital
   $ 12,441  
 
    
 		  

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(21)   Calculate as follows:

         
    (Dollars in thousands)
Eliminate existing Chart Bank retained earnings
   $ (4,337 )
One-time merger charges incurred:
        
Restructure FHLB advances and conversion of accounts
     (3,075 )
Tax effect at marginal rate of 36.0%
     1,107  
Adjustment to retained earnings
   $ (6,305 )
 
    
 		  

(22)   Calculate to eliminate the capital account entries of Chart Bank pursuant to purchase accounting.

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     December 31, 2003 Pro Forma Balance Sheet—Maximum, as Adjusted, of Offering Range. The following table presents pro forma balance sheet information at December 31, 2003 for Benjamin Franklin Bancorp and Chart Bank assuming the sale of 6,612,500 shares at the maximum, as adjusted, of the offering range.

                                                 
    Benjamin           Benjamin            
    Franklin   Pro Forma   Franklin            
    Bancorp   Conversion   Bancorp as   Chart Bank   Pro Forma Merger   Pro Forma
    Historical
   Adjustments (1)
   Converted
   Historical
   Adjustments (2)
   Consolidated
    (Dollars in thousands)
Assets
                                                
Cash and cash equivalents
   $ 35,485     $ —     $ 35,485     $ 34,874     $ —     $ 70,359  
Securities available for sale, at fair value
     102,646       55,939 (3)     158,585       5,404       (28,082 ) (11)     135,907  
Securities held to maturity, at amortized cost
     386       —       386       23,965       —       24,351  
Loans, net
     288,862       —       288,862       139,890       299 (12)     429,051  
Restricted equity securities, at cost
     7,222       —       7,222       1,060       —       8,282  
Premises and equipment, net
     11,199       —       11,199       2,400       427 (13)     14,026  
Goodwill
     4,248       —       4,248       —       28,582 (14)     32,830  
Core deposit intangible
     226       —       226       —       3,799 (15)     4,025  
Other amortizing intangible assets
     862       —       862       —       —       862  
Other assets
     7,708       1,440 (4)     9,148       2,261       298 (16)     11,707  
 
    
 		      
 		      
 		      
 		      
 		      
 		  
Total assets
   $ 458,844     $ 57,379     $ 516,223     $ 209,854     $ 5,323     $ 731,400  
 
    
 		      
 		      
 		      
 		      
 		      
 		  
Liabilities
                                                
Deposits
   $ 380,257     $ —     $ 380,257     $ 175,801     $ 703 (17)   $ 556,761  
FHLB advances and other borrowings
     36,000       — (5)     36,000       15,930       (29 ) (18)     51,901  
Other liabilities
     4,286       —       4,286       724       —       5,010  
Subordinated debt
     9,000       —       9,000       —       —       9,000  
 
    
 		      
 		      
 		      
 		      
 		      
 		  
Total liabilities
     429,543       —       429,543       192,455       674       622,672  
 
    
 		      
 		      
 		      
 		      
 		      
 		  
Stockholder’s equity
                                                
Common Stock
     —       — (6)     —       1,420       (1,420 ) (19)     —  
Additional paid-in capital
     —       68,354 (7)     68,354       11,575       12,441 (20)     92,370  
Retained earnings
     31,308       (2,560 )(8)     28,748       4,337       (6,305 ) (21)     26,780  
Employee stock ownership plan shares
     —       (5,610 )(9)     (5,610 )     —       —       (5,610 )
Stock-based incentive plan shares
     —       (2,805 )(10)     (2,805 )     —       —       (2,805 )
Accumulated other comprehensive (loss) income
     (2,007 )     —       (2,007 )     67       (67 ) (22)     (2,007 )
 
    
 		      
 		      
 		      
 		      
 		      
 		  
Total stockholders’ equity
     29,301       57,379       86,680       17,399       4,649       108,728  
 
    
 		      
 		      
 		      
 		      
 		      
 		  
Total liabilities and stockholders’ equity
   $ 458,844     $ 57,379     $ 516,223     $ 209,854     $ 5,323     $ 731,400  
 
    
 		      
 		      
 		      
 		      
 		      
 		  

(1)   Shows the effect of the mutual-to-stock conversion of Benjamin Franklin Bancorp, assuming gross proceeds of $66.1 million, the maximum, as adjusted, offering expenses of $1.8 million, a contribution to the Benjamin Franklin Bank Charitable Foundation of $4.0 million of common stock, and establishment of an employee stock ownership plan and the stock-based incentive plan that will acquire 8.0% and 4.0%, respectively, of the number of shares issued in the offering including the shares issued to the Benjamin Franklin Bank Charitable Foundation. The employee stock ownership plan is assumed to purchase its shares in the offering and in open market purchases. The stock-based incentive plan is assumed to purchase shares in the open market after receiving stockholder approval to adopt the plan. Open market purchases by the employee stock ownership plan and stock-based incentive plan are assumed at $10 per share. The reduction in retained earnings reflects the one-time expense of funding the Benjamin Franklin Bank Charitable Foundation net of a deferred tax asset.

(2)   Reflects the purchase accounting and acquisition adjustments related to the acquisition of Chart Bank for a price of $30.75 per share in cash and newly issued common stock.

(3)   Net cash proceeds raised in the conversion equal to gross proceeds of $66.1 million, less offering expenses of $1.8 million, the purchase of shares by the employee stock ownership plan of $5.6 million, and the assumed purchase of the stock-based incentive plan shares of $2.8 million.

(4)   Deferred tax asset resulting from the expense of funding the Benjamin Franklin Bank Charitable Foundation based on marginal tax rate of 36.0%.

(5)   The employee stock ownership plan loan is assumed to be funded internally with a loan from Benjamin Franklin Bancorp, thus no borrowing liability will be recorded on the consolidated balance sheet of Benjamin Franklin Bancorp.

(6)   No par value common stock.

(7)   Net proceeds of stock offering $64.4 million plus shares contributed to the Benjamin Franklin Bank Charitable Foundation of $4.0 million.

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(8)   After-tax impact to retained earnings from the $4.0 million expense for funding the Benjamin Franklin Bank Charitable Foundation based on a marginal tax rate of 36.0%.

(9)   Contra-equity account established to reflect the unallocated shares in the employee stock ownership plan, anticipated to purchase 8.0% of the shares issued in the offering (including shares contributed to the Benjamin Franklin Bank Charitable Foundation).

(10)   Contra-equity account established to reflect the unvested shares in the stock-based incentive plan equal to 4.0% of offering plus foundation shares.

(11)   Includes the cash portion of the merger consideration paid to Chart Bank in the amount of $21.5 million (which assumes that all Chart Bank options are cashed out at the closing and factors in the tax-deductibility of the option cash-out), estimated non-tax deductible transaction costs of $0.9 million remaining to be paid at September 30, 2004, estimated tax deductible one time acquisition costs of $3.1 million, and estimated $3.1 million of one time expenses that will be incurred by Benjamin Franklin Bancorp to consolidate Chart Bank, net of $0.5 million of cash received from return of the Chart Bank Cooperative Central Bank deposit.

(12)   Yield adjustment to reflect the difference between portfolio yields and market rates as of September 30, 2004 for loans acquired in the acquisition. Yield adjustments were calculated using present value analysis as follows: (a) the acquired loan portfolio was segregated into pools of similar loans; (b) cash flow projections were prepared for each loan pool based interest rates, balances, remaining terms to maturity, and estimated prepayment speeds for each pool; (c) cash flows were discounted to present value using risk adjusted discount rates for comparable loans; and (d) the resulting difference between the present value of future cash flows for each pool and the corresponding principal balance was the yield adjustment. Yield adjustments on acquired loans are amortized into interest income using the interest method over the estimated lives of the acquired loans, which range between 0.5 years and 8.3 years, depending upon the type of loan (average is 4.2 years).

(13)   Reflects the difference between market values and net book values of fixed assets acquired in the acquisition.

(14)   Goodwill is an intangible asset that is not subject to amortization. The goodwill balance will be tested annually for impairment. Goodwill is calculated as:

         
    Chart Bank
    (Dollars in thousands,
    except per share data)
Purchase price per share
   $ 30.75  
Number of shares acquired
     1,420,000  
Number of options acquired
     137,000  
Average exercise price of options
   $ 10.00  
Cost of purchasing shares
   $ 43,665  
Cost of purchasing options
     2,843  
Tax effect of purchasing options
     (1,024 )
 
    
 		  
Purchase price (net of tax effect of purchasing options)
     45,484  
Less: acquired stockholders’ equity
     (17,399 )
Plus: estimated non-tax deductible transaction costs
     983  
Plus: taxable purchase accounting adjustments Estimated tax deductible transaction expenses (pre-tax)
     3,091  
Yield adjustment for acquired CDs
     703  
Yield adjustment for acquired borrowings
     (29 )
Yield adjustment for acquired loans
     (299 )
Core deposit intangible
     (3,799 )
Market value adjustment for fixed assets
     (427 )
Tax effect at 36.0% marginal tax rate
     274  
 
    
 		  
Goodwill
   $ 28,582  
 
    
 		  

(15)   Core deposit intangible is an identifiable intangible asset representing the economic value of the acquired Chart Bank deposit base, calculated as the present value benefit of funding operations with the acquired deposit base versus using an alternative wholesale funding source. The core deposit intangible asset is amortized into expense on an accelerated basis using the double declining balance method over 8.3 years.

(16)   Deferred tax liability of $0.3 million on tax-deductible transaction costs and purchase accounting adjustments (see footnote 14) and deferred tax asset of $1.1 million on one time merger charges (see footnote 21), net of $0.5 million reduction from repayment of Chart Bank Cooperative Central Bank deposit.

(17)   Yield adjustment to reflect the difference between portfolio yields and market rates as of September 30, 2004 for time deposits acquired in the acquisition. Yield adjustment is calculated as the difference between the current portfolio balances for time deposits and the present value of projected cash flows related to the time deposits discounted using current market rates. Current market rates were based on average rates paid by institutions competing in the regional market area based on rate surveys on or around September 30, 2004. The yield adjustment for time deposits will be accreted into income using the interest method over the lives of the acquired time deposits based on their monthly maturities (5 years).

(18)   Yield adjustment to reflect the difference between portfolio yields and market rates as of September 30, 2004 for borrowings acquired in the acquisition. Yield adjustment is calculated as the difference between the current portfolio balance for borrowings and the present value of projected cash flows related to the borrowings discounted using current market rates. Current market rates were based on rates offered by the Federal Home Loan Bank of Boston as of September 30, 2004. The yield adjustment for borrowings will be amortized into expense using the interest method over the lives of the acquired borrowings based on their monthly maturities (4 years).

(19)   Eliminate Chart Bank common stock par value. Newly issued shares of Benjamin Franklin Bancorp have no par value.

(20)   Calculate as follows:

         
    (Dollars in thousands)
Eliminate existing Chart Bank paid-in capital
   $ (11,575 )
Common stock (paid-in capital) issued in acquisition
     24,016  
 
    
 		  
Adjustment to paid-in capital
   $ 12,441  
 
    
 		  

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Table of Contents

(21)   Calculate as follows:

         
    (Dollars in thousands)
Eliminate existing Chart Bank retained earnings
   $ (4,337 )
One-time merger charges incurred:
        
Restructure FHLB advances and conversion of accounts
     (3,075 )
Tax effect at marginal rate of 36.0%
     1,107  
 
    
 		  
Adjustment to retained earnings
   $ (6,305 )
 
    
 		  

(22)   Calculate to eliminate the capital account entries of Chart Bank pursuant to purchase accounting.

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Table of Contents

     September 30, 2004 Pro Forma Income Statement—Minimum of Offering Range. The following table presents pro forma income statement information for the nine months ended September 30, 2004 for Benjamin Franklin Bancorp and Chart Bank assuming the sale of 4,250,000 shares at the minimum of the offering range.

                                                 
    Benjamin           Benjamin           Pro Forma    
    Franklin   Pro Forma   Franklin           Merger    
    Bancorp   Conversion   Bancorp as   Chart Bank   Adjustments   Pro Forma
    Historical
   Adjustments (1)
   Converted
   Historical (3)
   (4)
   Consolidated
    (Dollars in thousands)
Interest income
   $ 15,223     $ —     $ 15,223     $ 8,006     $ (158 ) (5)   $ 23,071  
Interest expense
     (5,024 )     —       (5,024 )     (2,732 )     517 (6)     (7,239 )
 
    
 		      
 		      
 		      
 		      
 		      
 		  
Net interest income before provision for loan losses
     10,199       —       10,199       5,274       359       15,832  
Provision for loan losses
     (470 )     —       (470 )     (90 )     —       (560 )
 
    
 		      
 		      
 		      
 		      
 		      
 		  
Net interest income after provision for loan losses
     9,729       —       9,729       5,184       359       15,272  
Non-interest income
     1,666       —       1,666       1,916       —       3,582  
Non-interest expense
     (9,457 )     (92) (2)     (9,549 )     (5,636 )     (696 ) (7)     (15,881 )
 
    
 		      
 		      
 		      
 		      
 		      
 		  
Income before provision for income taxes
     1,938       (92 )     1,846       1,464       (337 )     2,973  
Provision for income taxes
     (626 )     33       (593 )     (680 )     121 (8)     (1,152 )
 
    
 		      
 		      
 		      
 		      
 		      
 		  
Net income
   $ 1,312     $ (59 )   $ 1,253     $ 784     $ (216 )   $ 1,821  
 
    
 		      
 		      
 		      
 		      
 		      
 		  

(1)   Shows the effect of the mutual-to-stock conversion of Benjamin Franklin Bancorp, assuming gross proceeds of $42.5 million, the minimum of the offering range, offering expenses of $1.6 million, a contribution to the Benjamin Franklin Bank Charitable Foundation of $3.4 million of common stock, and establishment of an employee stock ownership plan that will acquire 8.0% of the number of shares issued in the offering including the shares issued to the Benjamin Franklin Bank Charitable Foundation. The employee stock ownership plan is assumed to purchase its shares in the offering and in open market purchases. The loan taken down by the employee stock ownership plan will be amortized over 30 years on a straight line basis. The employee stock ownership plan expense shown reflects the estimated amortization expense on a pretax basis for the period shown. Benjamin Franklin Bancorp also intends to adopt an stock-based incentive plan that will purchase 4.0% of the number of shares issued in the offering plus the shares issued to the Benjamin Franklin Bank Charitable Foundation. The stock-based incentive plan is assumed to purchase shares in the open market after receiving stockholder approval. Open market purchases by the employee stock ownership plan and stock-based incentive plan are assumed at $10 per share. Adjustments to record estimated stock-based incentive plan expenses and interest income to be earned on net proceeds of the offering will be recorded as incurred. Since these estimates are non-recurring, they are not reflected in the calculations of pro forma income. The estimated interest income assuming net cash proceeds of $35.4 million from the offering are invested at an average pretax yield of 2.16% for the nine months ended September 30, 2004 would be approximately $0.6 million pretax. The yield utilized approximates the yield on a one year U.S. Treasury security as of September 30, 2004. The estimated expense for the stock-based incentive plan assuming gross proceeds of $42.5 million is $0.3 million pretax for the nine months ended September 30, 2004. The employee stock ownership plan loan is amortized over 30 years on a straight-line basis. Employee stock ownership plan shares are assumed to be released at $10 per share. Stock-based incentive plan shares are assumed to vest over 5 years on a straight-line basis. Taxes are calculated on an assumed marginal rate of 36.0%. No expenses are included for the shares issued to the Benjamin Franklin Bank Charitable Foundation or other merger-related charges, all of which are one time expenses.

(2)   Employee stock ownership plan loan with a balance of $3.7 million, an amortization period of 30 years straight line. Employee stock ownership plan loan is assumed to be funded internally, so no interest expense is recorded on the consolidated income statement for Benjamin Franklin Bancorp Employee stock ownership plan expense thus reflects only the amortization of principal for the period shown.

(3)   Chart Bank operating results for the nine months ended September 30, 2004 include $382,000 of merger-related expenses.

(4)   Reflects the purchase accounting and acquisition adjustments related to the acquisition of Chart Bank for a price of $30.75 per share in cash and newly issued common stock.

(5)   Adjustment to interest income is the amortization of the loan premium on the Chart Bank loans resulting from purchase accounting. Adjustments to record estimated interest income to be foregone as a result of funding the cash portion of the merger consideration paid to stockholders of Chart Bank and the expense of the acquisition will be recorded as incurred. Since these estimates are non-recurring, they are not reflected in the Pro forma income statements. The estimated reduction in interest income assuming total funding requirements of $28.1 million for the acquisition and related expenses, assuming such cash costs were funded with investments yielding 2.16% for the nine months ended September 30, 2004, would be approximately $0.5 million. The yield approximates the yield on the one year U.S. Treasury security on September 30, 2004.

(6)   Adjustment to interest expense is calculated as follows:

         
    (Dollars in thousands)
Accretion of deposit premium from purchase accounting
   $ 533  
Amortization of borrowings discount from purchase accounting
     (16 )
 
    
 		  
Adjustment to interest income
   $ 517  
 
    
 		  

(7)   Adjustment to non-interest expense is calculated as follows:

         
Amortization of new core deposit intangible
   $ (684 )
Depreciation adjustment for market value of fixed assets
     (12 )
 
    
 		  
Adjustment to non-interest expense
   $ (696 )
 
    
 		  

(8)   Marginal tax rate of 36.0%.

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     September 30, 2004 Pro Forma Income Statement—Maximum, as Adjusted, of Offering Range. The following table presents pro forma income statement information for the nine months ended September 30, 2004 for Benjamin Franklin Bancorp and Chart Bank assuming the sale of 6,612,500 shares at the maximum, as adjusted, of the offering range.

                                                 
            Pro Forma   Benjamin           Pro Forma    
    Benjamin   Conversion   Franklin           Merger    
    Franklin   Adjustments   Bancorp as   Chart Bank   Adjustments   Pro Forma
    Historical
   (1)
   Converted
   Historical(3)
   (4)
   Consolidated
                    (Dollars in thousands)                
Interest income
   $ 15,223     $ —     $ 15,223     $ 8,006     $ (158 ) (5)   $ 23,071  
Interest expense
     (5,024 )     —       (5,024 )     (2,732 )     517 (6)     (7,239 )
 
    
 		      
 		      
 		      
 		      
 		      
 		  
Net interest income before provision for loan losses
     10,199       —       10,199       5,274       359       15,832  
Provision for loan losses.
     (470 )     —       (470 )     (90 )     —       (560 )
 
    
 		      
 		      
 		      
 		      
 		      
 		  
Net interest income after provision for loan losses.
     9,729       —       9,729       5,184       359       15,272  
Non-interest income
     1,666       —       1,666       1,916       —       3,582  
Non-interest expense
     (9,457 )     (141) (2)     (9,598 )     (5,636 )     (696 ) (7)     (15,930 )
 
    
 		      
 		      
 		      
 		      
 		      
 		  
Income before provision for income taxes
     1,938       (141 )     1,797       1,464       (337 )     2,924  
Provision for income taxes
     (626 )     51       (575 )     (680 )     121 (8)     (1,134 )
 
    
 		      
 		      
 		      
 		      
 		      
 		  
Net income
   $ 1,312     $ (90 )   $ 1,222     $ 784     $ (216 )   $ 1,790  
 
    
 		      
 		      
 		      
 		      
 		      
 		  

(1)   Shows the effect of the mutual-to-stock conversion of Benjamin Franklin Bancorp, assuming gross proceeds of $66.1 million, the maximum, as adjusted, of the offering range, offering expenses of $1.8 million, a contribution to the Benjamin Franklin Bank Charitable Foundation of $4.0 million of common stock, and establishment of an employee stock ownership plan that will acquire 8.0% of the number of shares issued in the offering including the shares issued to the Benjamin Franklin Bank Charitable Foundation. The employee stock ownership plan is assumed to purchase its shares in the offering and in open market purchases. The loan taken down by the employee stock ownership plan will be amortized over 30 years on a straight line basis. The employee stock ownership plan expense shown reflects the estimated amortization expense on a pretax basis for the period shown. Benjamin Franklin Bancorp also intends to adopt an stock-based incentive plan that will purchase 4.0% of the number of shares issued in the offering plus the shares issued to the Benjamin Franklin Bank Charitable Foundation. The stock-based incentive plan is assumed to purchase shares in the open market after receiving stockholder approval. Open market purchases by the employee stock ownership plan and stock-based incentive plan are assumed at $10 per share. Adjustments to record estimated stock-based incentive plan expenses and interest income to be earned on net proceeds of the offering will be recorded as incurred. Since these estimates are non-recurring, they are not reflected in the calculations of pro forma income. The estimated interest income assuming net cash proceeds of $55.9 million from the offering are invested at an average pretax yield of 2.16% for the nine months ended September 30, 2004 would be approximately $0.9 million pretax. The yield utilized approximates the yield on a one year U.S. Treasury security as of September 30, 2004. The estimated expense for the stock-based incentive plan assuming gross proceeds of $66.1 million is $0.4 million pretax for the nine months ended September 30, 2004. The employee stock ownership plan loan is amortized over 30 years on a straight-line basis. Employee stock ownership plan shares are assumed to be released at $10 per share. Stock-based incentive plan shares are assumed to vest over 5 years on a straight-line basis. Taxes are calculated on an assumed marginal rate of 36.0%. No expenses are included for the shares issued to the Benjamin Franklin Bank Charitable Foundation or other merger-related charges, all of which are one time expenses.

(2)   Employee stock ownership plan loan with a balance of $5.6 million, an amortization period of 30 years straight line. Employee stock ownership plan loan is assumed to be funded internally, so no interest expense is recorded on the consolidated income statement for Benjamin Franklin Bancorp Employee stock ownership plan expense thus reflects only the amortization of principal for the period shown.
 
(3)   Chart Bank operating results for the nine months ended September 30, 2004 include $382,000 of merger-related expenses.
 
(4)   Reflects the purchase accounting and acquisition adjustments related to the acquisition of Chart Bank for a price of $30.75 per share in cash and newly issued common stock.
 
(5)   Adjustment to interest income is the amortization of the loan premium on the Chart Bank loans resulting from purchase accounting. Adjustments to record estimated interest income to be foregone as a result of funding the cash portion of the merger consideration paid to stockholders of Chart Bank and the expense of the acquisition will be recorded as incurred. Since these estimates are non-recurring, they are not reflected in the Pro forma income statements. The estimated reduction in interest income assuming total funding requirements of $28.1 million for the acquisition and related expenses, assuming such cash costs were funded with investments yielding 2.16% for the nine months ended September 30, 2004, would be approximately $0.5 million. The yield approximates the yield on the one year U.S. Treasury security on September 30, 2004.
 
(6)   Adjustment to interest expense is calculated as follows:

                 
            (Dollars in Thousands)
 
   Accretion of deposit premium from purchase accounting   $ 533  
 
   Amortization of borrowings discount from purchase accounting     (16 )
 
            
 		  
 
   Adjustment to interest expense   $ 517  
 
            
 		  
(7)
   Adjustment to non-interest expense is calculated as follows:        
         
Amortization of new core deposit intangible
   $ (684 )
Depreciation adjustment for market value of fixed assets
     (12 )
 
    
 		  
Adjustment to non-interest expense
   $ (696 )
 
    
 		  

(8)   Marginal tax rate of 36.0%.

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     December 31, 2003 Pro Forma Income Statement—Minimum of Offering Range. The following table presents pro forma income statement information for the year ended December 31, 2003 for Benjamin Franklin Bancorp and Chart Bank assuming the sale of 4,250,000 shares at the minimum of the offering range.

                                                 
    Benjamin   Pro Forma   Benjamin                
    Franklin   Conversion   Franklin           Pro Forma    
    Bancorp   Adjustments   Bancorp as   Chart Bank   Merger   Pro Forma
    Historical
   (1)
   Converted
   Historical
   Adjustments (3)
   Consolidated
                    (Dollars in thousands)        
Interest income
   $ 19,532     $ —     $ 19,532     $ 10,091     $ (187 ) (4)   $ 29,436  
Interest expense
     (6,752 )     —       (6,752 )     (3,452 )     588 (5)     (9,616 )
 
    
 		      
 		      
 		      
 		      
 		      
 		  
Net interest income before provision for loan losses
     12,780       —       12,780       6,639       401       19,820  
Provision for loan losses
     (625 )     —       (625 )     (120 )     —       (745 )
 
    
 		      
 		      
 		      
 		      
 		      
 		  
Net interest income after provision for loan losses
     12,155       —       12,155       6,519       401       19,075  
 
    
 		      
 		      
 		      
 		      
 		      
 		  
Non-interest income
     3,076       —       3,076       2,665       —       5,741  
Non-interest expense
     (12,724 )     (122 ) (2)     (12,846 )     (6,406 )     (928 ) (6)     (20,180 )
Income before provision for income taxes
     2,507       (122 )     2,385       2,778       (527 )     4,636  
Provision for income taxes
     (819 )     44       (775 )     (1,076 )     190 (7)     (1,661 )
 
    
 		      
 		      
 		      
 		      
 		      
 		  
Net income
   $ 1,688     $ (78 )   $ 1,610     $ 1,702     $ (337 )   $ 2,975  
 
    
 		      
 		      
 		      
 		      
 		      
 		  

(1)   Shows the effect of the mutual-to-stock conversion of Benjamin Franklin Bancorp, assuming gross proceeds of $42.5 million, the minimum of the offering range, offering expenses of $1.6 million, a contribution to the Benjamin Franklin Bank Charitable Foundation of $3.4 million of common stock, and establishment of an employee stock ownership plan that will acquire 8.0% of the number of shares issued in the offering including the shares issued to the Benjamin Franklin Bank Charitable Foundation. The employee stock ownership plan is assumed to purchase its shares in the offering and in open market purchases. The loan taken down by the employee stock ownership plan will be amortized over 30 years on a straight line basis. The employee stock ownership plan expense shown reflects the estimated amortization expense on a pretax basis for the period shown. Benjamin Franklin Bancorp also intends to adopt an stock-based incentive plan that will purchase 4.0% of the number of shares issued in the offering plus the shares issued to the Benjamin Franklin Bank Charitable Foundation. The stock-based incentive plan is assumed to purchase shares in the open market after receiving stockholder approval. Open market purchases by the employee stock ownership plan and stock-based incentive plan are assumed at $10 per share. Adjustments to record estimated stock-based incentive plan expenses and interest income to be earned on net proceeds of the offering will be recorded as incurred. Since these estimates are non-recurring, they are not reflected in the calculations of pro forma income. The estimated interest income assuming net cash proceeds of $35.4 million from the offering are invested at an average pretax yield of 1.26% for the year ended December 31, 2003 would be approximately $0.5 million pretax. The yield utilized approximates the yield on a one year U.S. Treasury security as of September 30, 2004. The estimated expense for the stock-based incentive plan assuming gross proceeds of $42.5 million is $0.4 million pretax for the year ended December 31, 2003. The employee stock ownership plan loan is amortized over 30 years on a straight-line basis. Employee stock ownership plan shares are assumed to be released at $10 per share. Stock-based incentive plan shares are assumed to vest over 5 years on a straight-line basis. Taxes are calculated on an assumed marginal rate of 36.0%. No expenses are included for the shares issued to the Benjamin Franklin Bank Charitable Foundation or other merger-related charges, all of which are one time expenses.

(2)   Employee stock ownership plan loan with a balance of $3.7 million, an amortization period of 30 years straight line. Employee stock ownership plan loan is assumed to be funded internally, so no interest expense is recorded on the consolidated income statement for Benjamin Franklin Bancorp Employee stock ownership plan expense thus reflects only the amortization of principal for the period shown.

(3)   Reflects the purchase accounting and acquisition adjustments related to the acquisition of Chart Bank for a price of $30.75 per share in cash and newly issued common stock.

(4)   Adjustment to interest income is the amortization of the loan premium on the Chart Bank loans resulting from purchase accounting. Adjustments to record estimated interest income to be foregone as a result of funding the cash portion of the merger consideration paid to stockholders of Chart Bank and the expense of the acquisition will be recorded as incurred. Since these estimates are non-recurring, they are not reflected in the Pro forma income statements. The estimated reduction in interest income assuming total funding requirements of $28.1 million for the acquisition and related expenses, assuming such cash costs were funded with investments yielding 1.26% for year ended December 31, 2003, would be approximately $0.4 million. The yield approximates the yield on the one year U.S. Treasury security on December 31, 2003.

(5)   Adjustment to interest expense is calculated as follows:

         
    (Dollars in thousands)
Accretion of deposit premium from purchase accounting
   $ 606  
Amortization of borrowings discount from purchase accounting
     (18 )
 
    
 		  
Adjustment to interest income
   $ 588  
 
    
 		  

(6)   Adjustment to non-interest expense is calculated as follows:

         
Amortization of new core deposit intangible
   $ (912 )
Depreciation adjustment for market value of fixed assets
     (16 )
 
    
 		  
Adjustment to non-interest expense
   $ (928 )
 
    
 		  

(7)   Marginal tax rate of 36.0%.

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     December 31, 2003 Pro Forma Income Statement—Maximum, as Adjusted, of Offering Range. The following table presents pro forma income statement information for the year ended December 31, 2003 for Benjamin Franklin Bancorp and Chart Bank assuming the sale of 6,612,500 shares at the maximum, as adjusted, of the offering range.

                                                 
    Benjamin   Pro Forma   Benjamin           Pro Forma    
    Franklin   Conversion   Franklin           Merger    
    Bancorp   Adjustments   Bancorp as   Chart Bank   Adjustments   Pro Forma
    Historical
   (1)
   Converted
   Historical
   (3)
   Consolidated
    (Dollars in thousands)
Interest income
   $ 19,532     $ —     $ 19,532     $ 10,091     $ (187) (4)   $ 29,436  
Interest expense
     (6,752 )     —       (6,752 )     (3,452 )     588 (5)     (9,616 )
 
    
 		      
 		      
 		      
 		      
 		      
 		  
Net interest income before provision for loan losses
     12,780       —       12,780       6,639       401       19,820  
Provision for loan losses
     (625 )     —       (625 )     (120 )     —       (745 )
 
    
 		      
 		      
 		      
 		      
 		      
 		  
Net interest income after provision for loan losses
     12,155       —       12,155       6,519       401       19,075  
Non-interest income
     3,076       —       3,076       2,665       —       5,741  
Non-interest expense
     (12,724 )     (187 ) (2)     (12,911 )     (6,406 )     (928 ) (6)     (20,245 )
 
    
 		      
 		      
 		      
 		      
 		      
 		  
Income before provision for income taxes
     2,507       (187 )     2,320       2,778       (527 )     4,571  
Provision for income taxes
     (819 )     67       (752 )     (1,076 )     190 (7)     (1,638 )
 
    
 		      
 		      
 		      
 		      
 		      
 		  
Net income
   $ 1,688     $ (120 )   $ 1,568     $ 1,702     $ (337 )   $ 2,933  
 
    
 		      
 		      
 		      
 		      
 		      
 		  

(1)   Shows the effect of the mutual-to-stock conversion of Benjamin Franklin Bancorp, assuming gross proceeds of $66.1 million, the minimum of the offering range, offering expenses of $1.8 million, a contribution to the Benjamin Franklin Bank Charitable Foundation of $4.0 million of common stock, and establishment of an employee stock ownership plan that will acquire 8.0% of the number of shares issued in the offering including the shares issued to the Benjamin Franklin Bank Charitable Foundation. The employee stock ownership plan is assumed to purchase its shares in the offering and in open market purchases. The loan taken down by the employee stock ownership plan will be amortized over 30 years on a straight line basis. The employee stock ownership plan expense shown reflects the estimated amortization expense on a pretax basis for the period shown. Benjamin Franklin Bancorp also intends to adopt an stock-based incentive plan that will purchase 4.0% of the number of shares issued in the offering plus the shares issued to the Benjamin Franklin Bank Charitable Foundation. The stock-based incentive plan is assumed to purchase shares in the open market after receiving stockholder approval. Open market purchases by the employee stock ownership plan and stock-based incentive plan are assumed at $10 per share. Adjustments to record estimated stock-based incentive plan expenses and interest income to be earned on net proceeds of the offering will be recorded as incurred. Since these estimates are non-recurring, they are not reflected in the calculations of pro forma income. The estimated interest income assuming net cash proceeds of $55.9 million from the offering are invested at an average pretax yield of 1.26% for the year ended December 31, 2003 would be approximately $0.7 million pretax. The yield utilized approximates the yield on a one year U.S. Treasury security as of September 30, 2004. The estimated expense for the stock-based incentive plan assuming gross proceeds of $66.1 million is $0.6 million pretax for the year ended December 31, 2003. The employee stock ownership plan loan is amortized over 30 years on a straight-line basis. Employee stock ownership plan shares are assumed to be released at $10 per share. Stock-based incentive plan shares are assumed to vest over 5 years on a straight-line basis. Taxes are calculated on an assumed marginal rate of 36.0%. No expenses are included for the shares issued to the Benjamin Franklin Bank Charitable Foundation or other merger-related charges, all of which are one time expenses.

(2)   Employee stock ownership plan loan with a balance of $5.6 million, an amortization period of 30 years straight line. Employee stock ownership plan loan is assumed to be funded internally, so no interest expense is recorded on the consolidated income statement for Benjamin Franklin Bancorp Employee stock ownership plan expense thus reflects only the amortization of principal for the period shown.
 
(3)   Reflects the purchase accounting and acquisition adjustments related to the acquisition of Chart Bank for a price of $30.75 per share in cash and newly issued common stock.
 
(4)   Adjustment to interest income is the amortization of the loan premium on the Chart Bank loans resulting from purchase accounting. Adjustments to record estimated interest income to be foregone as a result of funding the cash portion of the merger consideration paid to stockholders of Chart Bank and the expense of the acquisition will be recorded as incurred. Since these estimates are non-recurring, they are not reflected in the Pro forma income statements. The estimated reduction in interest income assuming total funding requirements of $28.1 million for the acquisition and related expenses, assuming such cash costs were funded with investments yielding 1.26% for year ended December 31, 2003, would be approximately $0.4 million. The yield approximates the yield on the one year U.S. Treasury security on December 31, 2003.
 
(5)   Adjustment to interest expense is calculated as follows:

         
    (Dollars in thousands)
Accretion of deposit premium from purchase accounting
   $ 606  
Amortization of borrowings discount from purchase accounting
     (18 )
 
    
 		  
Adjustment to interest income
   $ 588  
 
    
 		  

(6)   Adjustment to non-interest expense is calculated as follows:

         
Amortization of new core deposit intangible
   $ (912 )
Depreciation adjustment for market value of fixed assets
     (16 )
 
    
 		  
Adjustment to non-interest expense
   $ (928 )
 
    
 		  

(7)   Marginal tax rate of 36.0%.

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Pro Forma Conversion Data

          The actual net proceeds from the sale of Benjamin Franklin Bancorp common stock in the offering cannot be determined until the conversion is completed. However, the net proceeds in the offering are currently estimated to be between $40.9 million and $55.8 million, or up to $64.4 million at the maximum, as adjusted, in the event the offering range is increased by approximately 15.0%, based upon the following assumptions:

•   Benjamin Franklin Bancorp will sell all shares of common stock in the subscription offering;
 
•   Benjamin Franklin Bancorp’s employee stock ownership plan will purchase 8.0% of the shares of common stock issued in the offering, including shares contributed to the Benjamin Franklin Bank Charitable Foundation. The employee stock ownership plan is assumed to be funded internally with a loan from Benjamin Franklin Bancorp;
 
•   Benjamin Franklin Bancorp will make a contribution to the Benjamin Franklin Bank Charitable Foundation amounting to 340,000 shares of its common stock at the minimum of the offering range and 400,000 shares of its common stock at the midpoint, maximum and maximum as adjusted of the offering range, with an assumed value of $10 per share;
 
•   Expenses of the offering, other than the fees to be paid to Ryan Beck are estimated to be $1.1 million;
 
•   Ryan Beck will receive reimbursement of legal fees and other expenses in the amount of $100,000, in addition to fees equal to 1.0% of the aggregate purchase price of the shares of stock sold in the offering, excluding any shares purchased by any employee benefit plans, by any of Benjamin Franklin Bancorp’s directors, officers or employees or members of their immediate families, issued to the Benjamin Franklin Bank Charitable Foundation or issued to the Chart Bank Stockholders in the acquisition;
 
•   2,401,575 shares will be issued to Chart Bank’s stockholders in the acquisition; and
 
•   The cash required to fund the acquisition of Chart Bank was $28.1 million as of December 31, 2003 and September 30, 2004.

          Benjamin Franklin Bancorp has prepared the following tables, which set forth Benjamin Franklin Bancorp’s historical consolidated net income and stockholders’ equity in combination with Chart Bank prior to the conversion, and Benjamin Franklin Bancorp’s pro forma consolidated net income and stockholders’ equity following the conversion and acquisition of Chart Bank. In preparing these tables and in calculating pro forma data, the following assumptions have been made:

•   Pro forma earnings have been calculated assuming the stock had been sold at the beginning of the period and the net proceeds, if any, had been invested at an average yield of 2.16% and 1.26% for the nine months ended September 30, 2004 and the year ended December 31, 2003, respectively, which approximates the yield on a one-year U.S. Treasury bill adjusted to a constant maturity (CMT) on September 30, 2004 and December 31, 2003, respectively;
 
•   The pro forma after-tax yield on the net proceeds from the offering is assumed to be 1.38% and 0.81% for the nine months ended September 30, 2004 and the year ended December 31, 2003, respectively, based on a marginal tax rate of 36.00%;
 
•   No withdrawals were made from Benjamin Franklin Bancorp’s deposit accounts for the purchase of shares in the offering;

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•   Historical and pro forma per share amounts have been calculated by dividing historical and pro forma amounts by the indicated number of shares of stock issued in the conversion, issued to Chart Bank stockholders and issued to the Benjamin Franklin Bank Charitable Foundation, as adjusted in the pro forma net income per share to give effect to the purchase of shares by the employee stock ownership plan;
 
•   Pro forma stockholders’ equity amounts have been calculated as if Benjamin Franklin Bancorp common stock had been sold in the offering on September 30, 2004 and December 31, 2003, respectively, and, accordingly, no effect has been given to the assumed earnings effect of the transactions; and
 
•   Pro forma tangible stockholders’ equity amounts have been calculated by subtracting the estimated balances of intangible assets from pro forma stockholders’ equity; intangible assets include assets such as core deposit intangibles and goodwill.

          The following pro forma information may not be representative of the financial effects of the conversion at the date on which the conversion and the acquisition actually occur and should not be taken as indicative of future results of operations.

          Pro forma stockholders’ equity represents the difference between the stated amount of Benjamin Franklin Bancorp assets and liabilities computed in accordance with generally accepted accounting principles used in the United States. Stockholders’ equity does not give effect to intangible assets in the event of a liquidation. The pro forma stockholders’ equity is not intended to represent the fair market value of the common stock and may be different than amounts that would be available for distribution to stockholders in the event of liquidation.

          Stockholders’ equity gives no effect to the liquidation account to be established for the benefit of eligible account holders and supplemental eligible account holders. See “The Conversion And The Offering-Effects Of The Conversion-Liquidation Rights “ on page [#].

          The tables on the following pages present historical data of Benjamin Franklin Bancorp and Chart Bank (as defined in the footnotes to the table), and Benjamin Franklin Bancorp’s pro forma data at or for the dates and periods indicated based on the assumptions set forth above and in the tables and should not be used as a basis for projection of the market value of the common stock following the conversion and the acquisition.

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    At or for the nine months ended September 30, 2004
                            Maximum
    Minimum of   Midpoint of   Maximum of   As Adjusted of
    Offering Range   Offering Range   Offering Range   Offering Range
    4,250,000 Shares at   5,000,000 shares   5,750,000 shares   6,612,500 shares
    $10 per share (1)
   at $10 per share
   at $10 per share
   at $10 per share (2)
    (Dollars in thousands, except per share data)
Gross proceeds
   $ 42,500     $ 50,000     $ 57,500     $ 66,125  
Plus: shares issued to the foundation (3)
     3,400       4,000       4,000       4,000  
Plus: shares issued to Chart Bank (4)
     24,016       24,016       24,016       24,016  
 
    
 		      
 		      
 		      
 		  
Pro Forma Market Capitalization
   $ 69,916     $ 78,016     $ 85,516     $ 94,141  
Gross proceeds
   $ 42,500     $ 50,000     $ 57,500     $ 66,125  
Less: conversion expenses
     (1,554 )     (1,622 )     (1,691 )     (1,771 )
 
    
 		      
 		      
 		      
 		  
Estimated net proceeds
     40,946       48,378       55,809       64,354  
Less: common stock acquired by ESOP (5)
     (3,672 )     (4,320 )     (4,920 )     (5,610 )
Less: common stock acquired by stock-based incentive plan (6)
     (1,836 )     (2,160 )     (2,460 )     (2,805 )
 
    
 		      
 		      
 		      
 		  
Estimated net proceeds as adjusted
     35,438       41,898       48,429       55,939  
Estimated acquisition cash costs (7)
   $ (28,082 )   $ (28,082 )   $ (28,082 )   $ (28,082 )
For the nine months ended September 30, 2004
                                
Consolidated net income
                                
Historical consolidated net income(8)
   $ 1,881     $ 1,881     $ 1,881     $ 1,881  
Pro forma income on net proceeds
     367       434       502       580  
Pro forma acquisition adjustment
     (291 )     (291 )     (291 )     (291 )
Pro forma ESOP adjustment (5)
     (59 )     (69 )     (79 )     (90 )
Pro forma stock-based incentive plan adjustment (6)
     (176 )     (207 )     (236 )     (269 )
 
    
 		      
 		      
 		      
 		  
Pro forma net income
   $ 1,722     $ 1,748     $ 1,777     $ 1,811  
 
    
 		      
 		      
 		      
 		  
Per share net income (reflects SOP93-6)
                                
Historical consolidated net income
   $ 0.28     $ 0.26     $ 0.24     $ 0.21  
Pro forma income on net proceeds
     0.06       0.06       0.06       0.06  
Pro forma acquisition adjustment
     (0.04 )     (0.04 )     (0.04 )     (0.03 )
Pro forma ESOP adjustment (5)
     (0.01 )     (0.01 )     (0.01 )     (0.01 )
Pro forma stock-based incentive plan adjustment (6)
     (0.03 )     (0.03 )     (0.03 )     (0.03 )
 
    
 		      
 		      
 		      
 		  
Pro forma net income per share
   $ 0.26     $ 0.24     $ 0.22     $ 0.20  
 
    
 		      
 		      
 		      
 		  
Shares used for calculating pro forma earnings per share
     6,633,555       7,380,375       8,071,875       8,867,100  
Stock price as a multiple of pro forma earnings per share (6)(9)
     28.85x       31.25x       34.09x       37.50x  
At September 30, 2004
                                
Stockholders’ equity:
                                
Historical consolidated stockholders’ equity (10)
   $ 52,634     $ 52,634     $ 52,634     $ 52,634  
Estimated net proceeds
     40,946       48,378       55,809       64,354  
Plus: tax benefit of shares issued to foundation (3)
     1,224       1,440       1,440       1,440  
Plus: shares issued to foundation (3)
     3,400       4,000       4,000       4,000  
Less: shares issued to foundation (3)
     (3,400 )     (4,000 )     (4,000 )     (4,000 )
Less: common stock acquired by ESOP (5)
     (3,672 )     (4,320 )     (4,920 )     (5,610 )
Less: common stock acquired by stock-based incentive plan (6)
     (1,836 )     (2,160 )     (2,460 )     (2,805 )
 
    
 		      
 		      
 		      
 		  
Pro forma stockholders’ equity
     89,296       95,972       102,503       110,013  
Intangible assets (11)
     (36,573 )     (36,573 )     (36,573 )     (36,573 )
 
    
 		      
 		      
 		      
 		  
Pro forma tangible stockholders equity
   $ 52,723     $ 59,399     $ 65,930     $ 73,440  
 
    
 		      
 		      
 		      
 		  
Stockholders’ equity per share
                                
Historical
   $ 7.52     $ 6.75     $ 6.16     $ 5.59  
Estimated net proceeds
     5.86       6.20       6.53       6.84  
Plus: tax benefit of shares issued to foundation (3)
     0.18       0.18       0.17       0.15  
Plus: shares issued to foundation (3)
     0.49       0.51       0.47       0.42  
Less: shares issued to foundation (3)
     (0.49 )     (0.51 )     (0.47 )     (0.42 )
Less: common stock acquired by ESOP (5)
     (0.53 )     (0.55 )     (0.58 )     (0.60 )
Less: common stock acquired by stock-based incentive plan (6)
     (0.26 )     (0.28 )     (0.29 )     (0.30 )
 
    
 		      
 		      
 		      
 		  
Pro forma stockholders’ equity per share
     12.77       12.30       11.99       11.68  
Intangible assets (11)
     (5.23 )     (4.69 )     (4.28 )     (3.88 )
 
    
 		      
 		      
 		      
 		  
Pro forma tangible stockholders’ equity per share
   $ 7.54     $ 7.61     $ 7.71     $ 7.80  
 
    
 		      
 		      
 		      
 		  
Shares used for pro forma stockholders equity per share
     6,991,575       7,801,575       8,551,575       9,414,075  
Stock price as a percentage of equity per share (6)
     78.31 %     81.30 %     83.40 %     85.62 %
Stock price as a percentage of tangible equity per share (6)(9)(11)
     132.63 %     131.41 %     129.70 %     128.21 %

(Footnotes on following page)

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(1)   If Benjamin Franklin Bancorp receives orders for fewer than 4,250,000 shares, Benjamin Franklin Bancorp may apply up to 2,082,500 unsubscribed shares toward the merger consideration to be paid to Chart Bank stockholders, but only in order to issue sufficient shares to achieve this minimum number. If the full 2,082,500 shares are applied in this manner, then, as of September 30, 2004, Benjamin Franklin Bancorp’s pro forma earnings per share would be $0.33, pro forma stockholders’ equity per share would be $13.99, pro forma tangible stockholders’ equity per share would be $6.54, stock price as a multiple of annualized pro forma earnings per share would be 22.73 times, stock price as a percentage of equity per share would be 71.48% and stock price as a percentage of tangible equity per share would be 152.91%.
 
(2)   As adjusted to give effect to an increase in the number of shares which could occur due to an increase in the estimated offering range of up to 15.0% as a result of regulatory considerations, demand for the shares, or changes in market or general financial and economic conditions following the commencement of the offering.
 
(3)   Benjamin Franklin Bancorp will make a contribution to the Benjamin Franklin Bank Charitable Foundation amounting to the lesser of 8.0% of the shares actually sold in the offering and 400,000 shares of its common stock. The pro forma net income does not take into account the non-recurring expense that will be recognized as a result of the establishment of the Foundation. Benjamin Franklin Bancorp expects to recognize a tax benefit of and an after tax expense related to the contribution to the Benjamin Franklin Bank Charitable Foundation.
 
(4)   Assumes 2,401,575 shares of Benjamin Franklin Bancorp common stock will be issued to Chart Bank stockholders in the acquisition.
 
(5)   It is assumed that the employee stock ownership plan will purchase up to 8.0% of the shares issued in the offering, including shares issued to the Benjamin Franklin Bank Charitable Foundation. The employee stock ownership plan is assumed to be funded internally with a loan from Benjamin Franklin Bancorp. Benjamin Franklin Bank intends to make annual contributions to the employee stock ownership plan in an amount at least equal to the principal and the interest requirement of the debt. Benjamin Franklin Bank’s total annual payments on the employee stock ownership plan debt is based upon 30 equal installments of principal and interest. The pro forma adjustments assume the employee stock ownership plan shares are allocated in equal installments based on the number of loan repayment installments assumed to be paid by Benjamin Franklin Bank, the fair value of the common stock remains at the subscription price and the employee stock ownership plan expense reflects an effective combined federal and state tax rate of 36.0%. The unallocated employee stock ownership plan shares are reflected as a reduction of stockholders equity. No reinvestment rate is assumed on the proceeds contributed to the fund the employee stock ownership plan. The pro forma net income further assumes (i) that 9,180, 10,800, 12,300 and 14,025 shares were committed to be released during the period at the minimum, midpoint, maximum and the adjusted maximum of the offering range, respectively, and (ii) only the employee stock ownership plan shares committed to be released during the period were considered outstanding for purposes of net income per share calculations.
 
(6)   If approved by Benjamin Franklin Bancorp’s stockholders, the stock-based incentive plan may purchase an aggregate number of shares of common stock equal to 4.0% of the shares to be sold in the offering, including shares issued to the Benjamin Franklin Bank Charitable Foundation (or possibly a greater number of shares if the plan is implemented more than one year after completion of the conversion, although such plan, including the amount awarded under such plan, may remain subject to supervisory restrictions), to be awarded as restricted shares to officers and directors Stockholder approval of the stock-based incentive plan and purchases by the plan may not occur earlier than six months after the completion of the conversion. The shares may be acquired directly from Benjamin Franklin Bancorp or through open market purchases. The funds to be used by the stock-based incentive plan to purchase the shares will be provided by Benjamin Franklin Bancorp. The table assumes that (i) the stock-based incentive plan acquires the shares through open market purchases at $10 per share, (ii) 15.0% of the amount contributed to the stock-based incentive plan is amortized as an expense during the nine months ended September 30, 2004 and (iii) the stock-based incentive plan expense reflects an effective combined federal and state tax rate of 36.0%. Assuming stockholder approval of the stock-based incentive plan and that shares of common stock (equal to 4.0% of the shares sold in the offering including shares issued to the Benjamin Franklin Bank Charitable Foundation) are awarded through the use of authorized but unissued shares of common stock, stockholders would have their ownership and voting interests diluted by approximately 2.7%.
 
(7)   Represents the cash portion of the purchase price of Chart Bank, transaction expenses related to the Chart Bank acquisition and cash merger expenses of Benjamin Franklin Bancorp as follows:

         
    (Dollars in thousands)
Acquisition of Chart Bank (net of tax-effect of option cash-out)
   $ 21,469  
Transaction expenditures
     983  
Merger expenses
     3,091  
One time operating expenses
     3,075  
Less: Recovery of Chart Bank Cooperative Central Bank deposit
     (536 )
 
    
 		  
Total acquisition cash costs
   $ 28,082  
 
    
 		  

(8)   Historical net income includes the historical net income of Benjamin Franklin Bancorp and Chart Bank, and the impact of the recurring purchase accounting adjustments.
 
(9)   No effect has been given to the issuance of additional shares of common stock pursuant to options granted under the stock-based incentive plan, which is expected to be adopted by Benjamin Franklin Bancorp following the offering and presented to stockholders for approval not earlier than six months after the completion of the conversion. If the stock-based incentive plan is approved by stockholders, a number of shares up to 10.0% of the shares sold in the offering (or possibly a greater number of shares if the plan is implemented more than one year after completion of the conversion, although such plan, including the amount awarded under such plan, may remain subject to supervisory restrictions) will be reserved for future issuance upon the exercise of options to be granted under the plan. The issuance of authorized but previously unissued shares of common stock pursuant to the exercise of options under such plan would dilute existing stockholders’ ownership and voting interests by approximately 6.02% at the maximum of the offering range.
 
(10)   Historical stockholders’ equity includes the historical equity of Benjamin Franklin Bancorp and the impact of the Chart Bank acquisition.
 
(11)   Equity is adjusted to exclude $36.6 million of goodwill and other intangibles on a pro forma basis reflecting the acquisition as of September 30, 2004.

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    At or for the year ended December 31, 2003
                            Maximum,
    Minimum of   Midpoint of   Maximum of   As Adjusted, of
    Offering Range   Offering Range   Offering Range   Offering Range
    4,250,000 Shares   5,000,000 Shares   5,750,000 Shares   6,612,500 Shares
    at $10 per share (1)
   at $10 per share
   at $10 per share
   at $10 per share (2)
    (Dollars in thousands, except per share data)
Gross proceeds
   $ 42,500     $ 50,000     $ 57,500     $ 66,125  
Plus: shares issued to the foundation (3)
     3,400       4,000       4,000       4,000  
Plus: shares issued to Chart Bank (4)
     24,016       24,016       24,016       24,016  
 
    
 		      
 		      
 		      
 		  
Pro Forma Market Capitalization
   $ 69,916     $ 78,016     $ 85,516     $ 94,141  
Gross proceeds
   $ 42,500     $ 50,000     $ 57,500     $ 66,125  
Less: conversion expenses
     (1,554 )     (1,622 )     (1,691 )     (1,771 )
 
    
 		      
 		      
 		      
 		  
Estimated net proceeds
     40,946       48,378       55,809       64,354  
Less: common stock acquired by ESOP (5)
     (3,672 )     (4,320 )     (4,920 )     (5,610 )
Less: common stock acquired by stock-based incentive plan (6)
     (1,836 )     (2,160 )     (2,460 )     (2,805 )
 
    
 		      
 		      
 		      
 		  
Estimated net proceeds
     35,438       41,898       48,429       55,939  
Estimated acquisition cash costs (7)
   $ (28,082 )   $ (28,082 )   $ (28,082 )   $ (28,082 )
For the 12 Months ended December 31, 2003
                                
Consolidated net income
                                
Historical consolidated net income (8)
   $ 3,053     $ 3,053     $ 3,053     $ 3,053  
Pro forma income on net proceeds
     286       338       391       451  
Pro forma acquisition adjustment
     (226 )     (226 )     (226 )     (226 )
Pro forma ESOP adjustment (5)
     (78 )     (92 )     (105 )     (120 )
Pro forma stock-based incentive plan adjustment (6)
     (235 )     (276 )     (315 )     (359 )
 
    
 		      
 		      
 		      
 		  
Pro forma net income
   $ 2,800     $ 2,797     $ 2,798     $ 2,799  
 
    
 		      
 		      
 		      
 		  
Per share net income (reflects SOP93-6)
                                
Historical
   $ 0.46     $ 0.41     $ 0.38     $ 0.35  
Pro forma income on net proceeds
     0.04       0.05       0.05       0.05  
Pro forma acquisition adjustment
     (0.03 )     (0.03 )     (0.03 )     (0.03 )
Pro forma ESOP adjustment (5)
     (0.01 )     (0.01 )     (0.01 )     (0.01 )
Pro forma stock-based incentive plan adjustment (6)
     (0.04 )     (0.04 )     (0.04 )     (0.04 )
 
    
 		      
 		      
 		      
 		  
Pro forma net income per share
   $ 0.42     $ 0.38     $ 0.35     $ 0.32  
 
    
 		      
 		      
 		      
 		  
Shares used for calculating pro forma earnings per share
     6,636,615       7,383,975       8,075,975       8,871,775  
Stock price as a multiple of pro forma earnings per share (6)(9)
     23.81       26.32       28.57       31.25  
At December 31, 2003
                                
Stockholders’ equity:
                                
Historical consolidated stockholders’ equity (10)
   $ 51,349     $ 51,349     $ 51,349     $ 51,349  
Estimated net proceeds
     40,946       48,378       55,809       64,354  
Plus: tax benefit of shares issued to foundation (3)
     1,224       1,440       1,440       1,440  
Plus: shares issued to foundation (3)
     3,400       4,000       4,000       4,000  
Less: shares issued to foundation (3)
     (3,400 )     (4,000 )     (4,000 )     (4,000 )
Less: common stock acquired by ESOP (5)
     (3,672 )     (4,320 )     (4,920 )     (5,610 )
Less: common stock acquired by stock-based incentive plan (6)
     (1,836 )     (2,160 )     (2,460 )     (2,805 )
 
    
 		      
 		      
 		      
 		  
Pro forma stockholders’ equity
     88,011       94,687       101,218       108,728  
Intangible assets (11)
     (36,855 )     (36,855 )     (36,855 )     (36,855 )
 
    
 		      
 		      
 		      
 		  
Pro forma tangible stockholders equity
   $ 51,156     $ 57,832     $ 64,363     $ 71,873  
 
    
 		      
 		      
 		      
 		  
Stockholders’ equity per share
                                
Historical
   $ 7.34     $ 6.58     $ 6.00     $ 5.45  
Estimated net proceeds
     5.86       6.20       6.54       6.85  
Plus: tax benefit of shares issued to foundation (3)
     0.18       0.18       0.17       0.15  
Plus: shares issued to foundation (3)
     0.49       0.51       0.47       0.42  
Less: shares issued to foundation (3)
     (0.49 )     (0.51 )     (0.47 )     (0.42 )
Less: common stock acquired by ESOP (5)
     (0.53 )     (0.55 )     (0.58 )     (0.60 )
Less: common stock acquired by stock-based incentive plan (6)
     (0.26 )     (0.28 )     (0.29 )     (0.30 )
 
    
 		      
 		      
 		      
 		  
Pro forma stockholders’ equity per share
     12.59       12.13       11.84       11.55  
Intangible assets (11)
     (5.27 )     (4.72 )     (4.31 )     (3.92 )
 
    
 		      
 		      
 		      
 		  
Pro forma tangible stockholders’ equity per share
   $ 7.32     $ 7.41     $ 7.53     $ 7.63  
 
    
 		      
 		      
 		      
 		  
Shares used for pro forma stockholders equity per share
     6,991,575       7,801,575       8,551,575       9,414,075  
Stock price as a percentage of equity per share (6)
     79.43 %     82.44 %     84.46 %     86.58 %
Stock price as a percentage of tangible equity per share (6)(9)(11)
     136.61 %     134.95 %     132.80 %     131.06 %

(Footnotes on following page)

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(1)   If Benjamin Franklin Bancorp receives orders for fewer than 4,250,000 shares, Benjamin Franklin Bancorp may apply up to 2,082,500 unsubscribed shares toward the merger consideration to be paid to Chart Bank stockholders, but only in order to issue sufficient shares to achieve this minimum number. If the full 2,082,500 shares are applied in this manner, then, as of December 31, 2003, Benjamin Franklin Bancorp’s pro forma earnings per share would be $0.58, pro forma stockholders’ equity per share would be $13.73, pro forma tangible stockholders’ equity per share would be $6.22, stock price as a multiple of annualized pro forma earnings per share would be 17.24 times, stock price as a percentage of equity per share would be 72.83% and stock price as a percentage of tangible equity per share would be 160.77%.
 
(2)   As adjusted to give effect to an increase in the number of shares which could occur due to an increase in the estimated offering range of up to 15.0% as a result of regulatory considerations, demand for the shares, or changes in market or general financial and economic conditions following the commencement of the offering.
 
(3)   Benjamin Franklin Bancorp will make a contribution to the Benjamin Franklin Bank Charitable Foundation amounting to the lesser of 8.0% of the shares actually sold in the offering and 400,000 shares of its common stock. The pro forma net income does not take into account the non-recurring expense that will be recognized as a result of the establishment of the Foundation. Benjamin Franklin Bancorp expects to recognize a tax benefit of and an after tax expense related to the contribution to the Benjamin Franklin Bank Charitable Foundation.
 
(4)   Assumes 2,401,575 shares of Benjamin Franklin Bancorp common stock will be issued to Chart Bank stockholders in the acquisition.
 
(5)   It is assumed that the employee stock ownership plan will purchase up to 8.0% of the shares issued in the offering, including shares issued to the Benjamin Franklin Bank Charitable Foundation. The employee stock ownership plan is assumed to be funded internally with a loan from Benjamin Franklin Bancorp. Benjamin Franklin Bank intends to make annual contributions to the employee stock ownership plan in an amount at least equal to the principal and the interest requirement of the debt. Benjamin Franklin Bank’s total annual payments on the employee stock ownership plan debt is based upon 30 equal installments of principal and interest. The pro forma adjustments assume the employee stock ownership plan shares are allocated in equal installments based on the number of loan repayment installments assumed to be paid by Benjamin Franklin Bank, the fair value of the common stock remains at the subscription price and the employee stock ownership plan expense reflects an effective combined federal and state tax rate of 36.0%. The unallocated employee stock ownership plan shares are reflected as a reduction of stockholders equity. No reinvestment rate is assumed on the proceeds contributed to the fund the employee stock ownership plan. The pro forma net income further assumes (i) that 12,240, 14,400, 16,400 and 18,700 shares were committed to be released during the period at the minimum, midpoint, maximum and the adjusted maximum of the offering range, respectively, and (ii) only the employee stock ownership plan shares committed to be released during the period were considered outstanding for purposes of net income per share calculations.
 
(6)   If approved by Benjamin Franklin Bancorp’s stockholders, the stock-based incentive plan may purchase an aggregate number of shares of common stock equal to 4.0% of the shares to be sold in the offering (or possibly a greater number of shares if the plan is implemented more than one year after completion of the conversion, although such plan, including the amount awarded under such plan, may remain subject to supervisory restrictions), to be awarded as restricted shares to officers and directors. Stockholder approval of the stock-based incentive plan and purchases by the plan may not occur earlier than six months after the completion of the conversion. The shares may be acquired directly from Benjamin Franklin Bancorp or through open market purchases. The funds to be used by the stock-based incentive plan to purchase the shares will be provided by Benjamin Franklin Bancorp. The table assumes that (i) the stock-based incentive plan acquires the shares through open market purchases at $10 per share, (ii) 15.0% of the amount contributed to the stock-based incentive plan is amortized as an expense during the year ended December 31, 2003 and (iii) the stock-based incentive plan expense reflects an effective combined federal and state tax rate of 36.0%. Assuming stockholder approval of the stock-based incentive plan and that shares of common stock (equal to 4.0% of the shares sold in the offering) are awarded through the use of authorized but unissued shares of common stock, stockholders would have their ownership and voting interests diluted by approximately 2.7%.
 
(7)   Represents the cash portion of the purchase price of Chart Bank, transaction expenses related to the Chart Bank acquisition and cash merger expenses of Benjamin Franklin Bancorp as follows:

         
Acquisition of Chart Bank (net of tax-effect of option cash-out)
   $ 21,469  
Transaction expenditures
     983  
Merger expenses
     3,091  
One time operating expenses
     3,075  
Less: Recovery of Chart Bank Cooperative Central Bank deposit
     (536 )
 
    
 		  
Total acquisition cash costs
   $ 28,082  
 
    
 		  

(8)   Historical net income includes the historical net income of Benjamin Franklin Bancorp and Chart Bank, and the impact of the recurring purchase accounting adjustments.
 
(9)   No effect has been given to the issuance of additional shares of common stock pursuant to options granted under the stock-based incentive plan, which is expected to be adopted by Benjamin Franklin Bancorp following the offering and presented to stockholders for approval not earlier than six months after the completion of the conversion. If the stock-based incentive plan is approved by stockholders, a number of shares up to 10.0% of the shares sold in the offering (or possibly a greater number of shares if the plan is implemented more than one year after completion of the conversion, although such plan, including the amount awarded under such plan, may remain subject to supervisory restrictions) will be reserved for future issuance upon the exercise of options to be granted under the stock option plan. The issuance of authorized but previously unissued shares of common stock pursuant to the exercise of options under such plan would dilute existing stockholders’ ownership and voting interests by approximately 6.02% at the maximum of the offering range.
 
(10)   Historical stockholders’ equity includes the historical equity of Benjamin Franklin Bancorp and the impact of the Chart Bank acquisition.
 
(11)   Equity is adjusted to exclude $36.9 million of goodwill and other intangibles on a pro forma basis reflecting the acquisition as of December 31, 2003.

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COMPARISON OF INDEPENDENT VALUATION AND PRO FORMA FINANCIAL INFORMATION WITH
AND WITHOUT THE BENJAMIN FRANKLIN BANK CHARITABLE FOUNDATION

          As set forth in the following table, if Benjamin Franklin Bancorp was not making a contribution to the Benjamin Franklin Bank Charitable Foundation as part of the conversion, RP Financial, LC. estimates that the pro forma valuation of Benjamin Franklin Bancorp would be greater, which would increase the amount of common stock offered for sale in the offering. Without the foundation, the amount of common stock offered for sale in the offering at the midpoint of the offering range would be approximately $6.0 million greater. If the Benjamin Franklin Bank Charitable Foundation were not established, there is no assurance that the appraisal prepared at the time of conversion would conclude that the pro forma market value of Benjamin Franklin Bancorp would be the same as the estimate set forth in the table below.

          The information presented in the following table is for comparative purposes only. It assumes that the conversion, the contribution to the Benjamin Franklin Bank Charitable Foundation and the Chart Bank acquisition were completed at September 30, 2004. It shows gross proceeds of $42.5 million, $50.0 million $57.5 million and $66.1 million, respectively, at the minimum, midpoint, maximum and maximum, as adjusted, of the offering range and the establishment of an employee stock ownership plan and a stock-based incentive plan that would acquire 8.0% and 4.0% respectively, of the number of shares issued in the offering including the shares issued to the Benjamin Franklin Bank Charitable Foundation. It assumes that the employee stock ownership plan will purchase shares in the offering and open market and that the stock-based incentive plan will purchase shares in the open market within one year of the conversion. Open market purchases are assumed at $10 per share. For comparative purposes, the table also shows the effects of the conversion, assuming no contribution to the foundation and gross proceeds of $47.6 million, $56.0 million, $64.4 million and $74.1 million, respectively, at the minimum, midpoint, maximum and maximum, as adjusted, of the offering range.

                                                                 
                                                    At the maximum,
    At the Minimum   At the Midpoint   At the Maximum   as adjusted
    4,250,000 Shares
   5,000,000 Shares
   5,750,000 Shares
   6,612,500 Shares
    With   Without   With   Without   With   Without   With   Without
    Foundation
   Foundation
   Foundation
   Foundation
   Foundation
   Foundation
   Foundation
   Foundation
    (Dollars in thousands, except per share amounts)
Estimated offering amount (1)
   $ 42,500     $ 47,600     $ 50,000     $ 56,000     $ 57,500     $ 64,400     $ 66,125     $ 74,060  
Pro forma market capitalization (2)
     69,916       71,616       78,016       80,016       85,516       88,416       94,141       98,076  
Pro forma total assets (3)
     816,030       819,653       822,706       826,967       829,237       834,282       836,747       842,694  
Pro forma total liabilities (4)
     726,734       726,734       726,734       726,734       726,734       726,734       726,734       726,734  
Pro forma stockholders’ equity
     89,296       92,919       95,972       100,233       102,503       107,548       110,013       115,960  
Pro forma net income (5)
     1,722       1,764       1,748       1,797       1,777       1,830       1,811       1,868  
Pro forma stockholders’ equity per share
     12.77       12.97       12.30       12.53       11.99       12.16       11.68       11.82  
Pro forma tangible stockholders’ equity per share
     7.54       7.86       7.61       7.96       7.71       8.02       7.80       8.09  
Pro forma net income per share (5)
   $ 0.26     $ 0.26     $ 0.24     $ 0.24     $ 0.22     $ 0.22     $ 0.20     $ 0.20  
Pro forma pricing ratios
                                                                
Offering price as a percent of pro forma stockholders’ equity per share
     78.31 %     77.10 %     81.30 %     79.81 %     83.40 %     82.24 %     85.62 %     84.60 %
Offering price as a percent of pro forma tangible stockholders’ equity per share
     132.63 %     127.23 %     131.41 %     125.63 %     129.70 %     124.69 %     128.21 %     123.61 %
Offering price as a multiple of pro forma net income per share (6)
     28.85       28.85       31.25       31.25       34.09       34.09       37.50       37.50  
Offering price to assets
     8.57 %     8.74 %     9.48 %     9.68 %     10.31 %     10.60 %     11.25 %     11.64 %
Pro Forma Financial Ratios
                                                                
Return on assets (7)
     0.28 %     0.29 %     0.28 %     0.29 %     0.29 %     0.29 %     0.29 %     0.30 %
Return on stockholders’ equity (8)
     2.57 %     2.53 %     2.43 %     2.39 %     2.31 %     2.27 %     2.19 %     2.15 %
Stockholders’ equity to assets
     10.94 %     11.34 %     11.67 %     12.12 %     12.36 %     12.89 %     13.15 %     13.76 %
Tangible stockholders’ equity to assets.
     6.76 %     7.20 %     7.56 %     8.05 %     8.32 %     8.90 %     9.18 %     9.85 %

(Footnotes on following page)

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(1)   Gross proceeds of the offering, based on the midpoint of the preliminary pro forma valuation prepared by RP Financial, LC. as of November 26, 2004.
 
(2)   Gross proceeds of the offering, plus shares issued to the Benjamin Franklin Bank Charitable Foundation and shares issued to Chart Bank stockholders in the acquisition.
 
(3)   Pro forma total assets are equal to Benjamin Franklin Bancorp’s total assets at September 30, 2004, plus estimated net proceeds and the tax benefit created by the shares issued to the Benjamin Franklin Bank Charitable Foundation plus the assets of Chart Bank, as adjusted to reflect acquisition and purchase accounting adjustments.
 
(4)   Pro forma total liabilities are equal to Benjamin Franklin Bancorp’s total liabilities at September 30, 2004, plus the liabilities assumed through the acquisition of Chart Bank as adjusted to reflect acquisition and purchase accounting adjustments.
 
(5)   Pro forma earnings per share for the nine months ended September 30, 2004. If the contribution to the Benjamin Franklin Bank Charitable Foundation had been expensed during the nine months ended September 30, 2004, Benjamin Franklin Bancorp would have incurred a net loss.
 
(6)   Offering price of $10 per share divided by annualized pro forma net income per share.
 
(7)   If the contribution to the Benjamin Franklin Bank Charitable Foundation had been expensed during the nine months ended September 30, 2004, annualized pro forma return on assets would have been (0.07%), (0.13%), (0.13%), and (0.12%) at the minimum, midpoint, maximum, and maximum, as adjusted, respectively.
 
(8)   If the contribution to the Benjamin Franklin Bank Charitable Foundation had been expensed during the nine months ended September 30, 2004, annualized pro forma return on equity would have been (0.68%), (1.13%), (1.02%) and (0.91%), at the minimum, midpoint, maximum, and maximum, as adjusted, respectively.

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BUSINESS OF BENJAMIN FRANKLIN BANCORP

General

          Benjamin Franklin Bancorp was organized in 1996 as a mutual holding company in connection with Benjamin Franklin Bank’s reorganization into the mutual holding company form of organization. Benjamin Franklin Bancorp is registered with the Federal Reserve Board as a bank holding company under the Bank Holding Company Act. Since the formation of Benjamin Franklin Bancorp, it has owned 100.0% of Benjamin Franklin Bank’s outstanding capital stock and will continue to do so after the completion of the conversion. At September 30, 2004, Benjamin Franklin Bancorp had total assets of $517.9 million and total deposits of $399.6 million.

          Benjamin Franklin Bank is a full-service, community-oriented financial institution offering products and services to individuals, families and businesses through 6 offices located in Norfolk and Worcester counties in Massachusetts. Benjamin Franklin Bank was originally organized as a Massachusetts state-charted mutual savings bank in 1871. In 1996, it became a Massachusetts-chartered savings bank in stock form upon the formation of Benjamin Franklin Bancorp as its mutual holding company.

          Benjamin Franklin Bank’s business consists primarily of making loans to its customers, including residential mortgages, commercial real estate loans, construction loans, commercial business loans and consumer loans, and investing in a variety of investment and mortgage-backed securities. Benjamin Franklin Bank funds these lending and investment activities with deposits from the general public, funds generated from operations and selected borrowings.

          On September 1, 2004, we entered into an agreement to acquire Chart Bank, which operates through two offices in Waltham and one office in Newton, Massachusetts. At September 30, 2004, Chart Bank had total assets of $256.3 million and total deposits of $216.0 million. This acquisition will expand Benjamin Franklin Bank’s geographic branching outreach, leverage its capital base and is expected to improve operating efficiency through increased scale.

Market Area and Competition

          We offer a variety of financial products and services designed to meet the needs of the communities we serve. Our primary deposit-gathering area is concentrated southwest of Boston in the communities in which our six banking offices are located-specifically in the towns of Franklin, Foxboro, Bellingham, Milford, and Medfield-and in contiguous communities in Norfolk and Worcester Counties. Our lending area is broader than our deposit-gathering area and includes all of Massachusetts and northern Rhode Island, although most of our loans are made to customers located in our primary deposit-gathering market area.

          We are headquartered in Franklin, Massachusetts, located 41 miles southwest of Boston. Five of the six Benjamin Franklin Bank offices are located in Norfolk County, while one office is located just across the county border in the town of Milford, in Worcester County. The counties in which Benjamin Franklin Bank currently operates include a mixture of rural, suburban and urban markets. The economies of these areas were historically based on manufacturing, but similar to many areas of the country, have now evolved into more service-oriented economies with employment in most large economic sectors including wholesale/retail trade, service, manufacturing, finance, real estate and government. A large portion of Norfolk County residents work in other nearby areas, including the City of Boston and the greater Boston area. There is also significant employment located along the I-495 corridor, which runs directly through Benjamin Franklin Bank’s Norfolk County market area.

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          According to published statistics, Norfolk County’s population has grown by 0.3% since the year 2000 to a total of 657,000 in 2004. Per capita income for the county has grown by 4.0% since 2000 to $38,037, 27.5% higher than that of Massachusetts and 57.9% higher than the U.S. as a whole. Median household income for Norfolk County was $72,764, 27.6% higher than for the state and 56.6% higher than the U.S. average. The unemployment rate for the county stood at 4.5% as of August 2004, lower than the state average of 4.6% and the U.S. average of 5.4%.

          We face substantial competition in our efforts to originate loans and attract deposits and other fee-based business. We face direct competition from a significant number of financial institutions, many with a state-wide, regional or national presence. Many of these financial institutions are significantly larger and have greater financial resources than Benjamin Franklin Bank.

Lending Activities

          General. Benjamin Franklin Bank’s gross loan portfolio aggregated $377.3 million at September 30, 2004, representing 72.9% of total assets at that date. In its lending activities, Benjamin Franklin Bank originates residential real estate loans secured by one-to-four-family residences, commercial real estate loans, residential and commercial construction loans, commercial loans, home equity lines-of-credit, fixed rate home equity loans, and other personal consumer loans. While Benjamin Franklin Bank makes loans throughout Massachusetts and northern Rhode Island, most of its lending activities are concentrated in its market area. Loans originated totaled $246.9 million in 2003 and $162.6 million in the first nine months of 2004. Residential mortgage loans sold in the secondary market, on a servicing-retained basis, totaled $96.3 million and $28.6 million during those same periods.

          Loans originated by Benjamin Franklin Bank are subject to federal and state laws and regulations. Interest rates charged by Benjamin Franklin Bank on its loans are influenced by the demand for such loans, the amount and cost of funding available for lending purposes, current asset/liability management objectives and the interest rates offered by competitors.

          The following table summarizes the composition of Benjamin Franklin Bank’s loan portfolio as of the dates indicated:

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                    At December 31,
    At September 30, 2004
   2003
   2002
   2001
   2000
   1999
    Amount
   Percent
   Amount
   Percent
   Amount
   Percent
   Amount
   Percent
   Amount
   Percent
   Amount
   Percent
                                    (Dollars in thousands)                                        
Mortgage loans on real estate:
                                                                                                
Residential
   $ 244,363       64.76 %   $ 172,123       59.22 %   $ 165,007       62.58 %   $ 172,959       66.99 %   $ 206,918       72.69 %   $ 190,027       70.43 %
Commercial
     79,173       20.98 %     68,652       23.62 %     51,357       19.48 %     45,532       17.64 %     44,456       15.62 %     43,734       16.21 %
Construction
     25,079       6.64 %     23,936       8.23 %     21,082       8.00 %     19,106       7.40 %     13,117       4.61 %     19,429       7.20 %
Home equity
     21,883       5.80 %     18,171       6.25 %     16,507       6.26 %     11,161       4.32 %     9,778       3.44 %     8,167       3.03 %
   
 
 
 
 
 
 
 
 
 
 
 
 
     370,498       98.18 %     282,882       97.32 %     253,953       96.32 %     248,758       96.35 %     274,269       96.36 %     261,357       96.87 %
   
 
 
 
 
 
 
 
 
 
 
 
Other loans:
                                                                                                
Commercial business
     4,972       1.32 %     5,559       1.92 %     6,552       2.48 %     5,512       2.14 %     5,951       2.09 %     4.649       1.72 %
Consumer and other
     1,879       0.50 %     2,219       0.76 %     3,157       1.20 %     3,899       1.51 %     4,417       1.55 %     3,811       1.41 %
   
 
 
 
 
 
 
 
 
 
 
 
 
     6,851       1.82 %     7,778       2.68 %     9,709       3.68 %     9,411       3.65 %     10,368       3.64 %     8,460       3.13 %
   
 
 
 
 
 
 
 
 
 
 
 
Total loans
     377,349       100.00 %     290,660       100.00 %     263,662       100.00 %     258,169       100.00 %     284,637       100.00 %     269,817       100.00 %
       
     
     
     
     
     
Other items:
                                                                                                
Deferred loan origination costs
     1,184               725               583               574               663               491          
Allowance for loan losses
     (3,017 )             (2,523 )             (2,312 )             (1,177 )             (1,068 )             (1,183 )        
 
    
 		              
 		              
 		              
 		              
 		              
 		          
Total loans, net
   $ 375,516             $ 288,862             $ 261,933             $ 257,566             $ 284,232             $ 269,125          
 
    
 		              
 		              
 		              
 		              
 		              
 		          

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          Residential Real Estate Loans. Benjamin Franklin Bank offers fixed-rate and adjustable-rate residential mortgage loans with maturities of up to 30 years and maximum loan amounts generally of up to $1.5 million. As of September 30, 2004, this portfolio totaled $244.4 million, or 64.8% of the total gross loan portfolio on that date. Of the residential mortgage loans outstanding on that date, 59.9% were adjustable-rate loans with an average yield of 4.2% and 40.1% were fixed-rate mortgage loans with an average yield of 5.3%. Residential mortgage loan originations totaled $183.3 million and $103.1 million for 2003 and the first nine months of 2004, respectively.

          The decision to originate loans for portfolio or for sale in the secondary market is made by the Bank’s Asset/Liability Management Committee, and is based on the organization’s interest rate risk profile. Current practice is to sell almost all newly originated fixed-rate 15 and 30 year monthly payment loans. At September 30, 2004, 15 and 30 year fixed rate monthly payment loans held in portfolio totaled $9.4 million, or 3.8% of total residential real estate mortgage loans at that date. Benjamin Franklin Bank originates most such loans under forward rate commitments to Freddie Mac and Fannie Mae. Benjamin Franklin Bank continues to service loans sold to Freddie Mac and Fannie Mae and earns a fee equal to 0.25% of the loan amounts outstanding for providing these services. The total of loans serviced for others as of September 30, 2004 is $133.2 million.

          Benjamin Franklin Bank also offers fixed-rate bi-weekly residential mortgage loans with maturities generally ranging between 10 and 30 years. Generally, Benjamin Franklin retains in its portfolio bi-weekly loans with terms of 15 years or less and sells those with terms greater than 15 years in the secondary market, with servicing rights retained. As of September 30, 2004, bi-weekly residential mortgage loans held in portfolio totaled $88.6 million, or 36.3 % of total residential mortgage loans on that date.

          The adjustable-rate mortgage (ARM) loans offered by Benjamin Franklin Bank make up the largest portion of the residential mortgage loans held in portfolio. At September 30, 2004, ARM loans totaled $146.4 million or 59.9% of total residential loans outstanding at that date. ARMs are offered for terms of up to 30 years with initial interest rates that are fixed for 1, 3 or 5 years. After the initial fixed-rate period, the interest rates on the loans are reset based on the relevant U.S. Treasury CMT (Constant Maturity Treasury) Index plus add-on margins of varying amounts, for periods of 1, 3 or 5 years. Interest rate adjustments on such loans are typically limited to no more than 2.0% during any adjustment period and 6.0% over the life of the loan. This feature of ARM loans that allows for periodic adjustments in the interest rate charged helps to reduce Benjamin Franklin Bank’s exposure to changes in interest rates. However, ARM loans may possess an element of credit risk not inherent in fixed-rate mortgage loans, in that borrowers are potentially exposed to increases in debt service requirements over the life of the loan in the event market interest rates rise. Higher payments may increase the risk of default, though this risk has not had a material adverse effect on Benjamin Franklin Bank to date.

          In its residential mortgage loan originations, Benjamin Franklin Bank lends up to a maximum loan-to-value ratio of 95.0% on mortgage loans secured by owner-occupied property, with the condition that private mortgage insurance is required for loans with a loan-to-value ratio in excess of 80.0%. Title insurance, hazard insurance and, if appropriate, flood insurance are required for all properties securing real estate loans made by the Bank. A licensed appraiser appraises all properties securing residential first mortgage loans.

          In an effort to provide financing for low and moderate-income first-time home buyers, Benjamin Franklin Bank originates and services residential mortgage loans with private mortgage insurance provided by the Mortgage Insurance Fund (MIF) of the Massachusetts Housing Finance Agency, or MassHousing. The program provides mortgage payment protection as an enhancement to mortgage

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insurance coverage. This no-cost benefit, known as ‘MI Plus’, provides up to six monthly principal and interest payments in the event of a borrower’s job loss.

          Commercial Real Estate Loans. Benjamin Franklin Bank originated $27.1 million and $17.7 million of commercial real estate loans in 2003 and the first nine months of 2004, respectively, and had $79.2 million of commercial real estate loans in its portfolio as of September 30, 2004. We have placed increasing emphasis on commercial real estate lending over the past several years, and as a result such loans have grown from 16.2% of the total loan portfolio at December 31, 1999 to 21.0% as of September 30, 2004. Benjamin Franklin Bank intends to further grow this segment of its loan portfolio, both in absolute terms and as a percentage of its total loan portfolio.

          Benjamin Franklin Bank generally originates commercial real estate loans for terms of up to 25 years, typically with interest rates that adjust over periods of one to seven years based on various rate indices. Commercial real estate loans are generally secured by multi-family income properties, small office buildings, retail facilities, warehouses, industrial properties and owner-occupied properties used for business. Generally, commercial real estate loans do not exceed 80.0% of the appraised value of the underlying collateral.

          In its evaluation of a commercial real estate loan application, Benjamin Franklin Bank considers the net operating income of the borrower’s business, the borrower’s expertise, credit history, and the profitability and value of the underlying property. In addition, for loans secured by rental properties, Benjamin Franklin Bank will also consider the terms of the leases and the quality of the tenants. Benjamin Franklin Bank generally requires that the properties securing these loans have debt service coverage ratios (the ratio of cash flow before debt service to debt service) of at least 1.20x. Benjamin Franklin Bank generally requires the borrowers seeking commercial real estate loans to personally guarantee those loans.

          Commercial real estate loans generally have larger balances and involve a greater degree of risk than residential mortgage loans. Loan repayment is often dependent on the successful operation and management of the properties, as well as on the collateral value of the commercial real estate securing the loan. Economic events and changes in government regulations could have an adverse impact on the cash flows generated by properties securing Benjamin Franklin Bank’s commercial real estate loans and on the value of such properties. See “Risk Factors-Our Commercial Real Estate, Construction and Commercial Business Loans May Expose Us To Increased Credit Risks” on page [#].

          Construction Loans. Benjamin Franklin Bank originates land acquisition, development and construction loans to builders and developers, as well as loans to individuals to finance the construction of residential dwellings for personal use. Benjamin Franklin Bank originated $16.2 million and $25.6 million in construction loans during 2003 and during the first nine months of 2004, respectively, and had $25.1 million in construction loans in its portfolio, representing 6.6% of such portfolio, as of September 30, 2004.

          Acquisition loans help finance the purchase of land intended for further development, including single family houses and condominiums, multi-family houses and commercial income property. In some cases, Benjamin Franklin Bank makes an acquisition loan before the borrower has received approval to develop the land as planned. In general, the maximum loan-to-value ratio for a land acquisition loan is 75.0% of the lower of the cost or appraised value of the property. Benjamin Franklin Bank also makes development loans to builders in its market area to finance improvements to real estate, consisting mostly of single-family subdivisions, typically to finance the cost of utilities, roads, waste treatment and other costs. Builders typically rely on the sale of single-family homes to repay development loans, although in some cases the improved building lots may be sold to another builder. The maximum amount loaned is

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generally limited to the cost of the improvements, not to exceed 80.0% of the appraised value, as completed. Advances are made in accordance with a schedule reflecting the cost of the improvements.

          Benjamin Franklin Bank also grants construction loans to area builders, often in conjunction with the development loans. In the case of residential subdivisions, these loans finance the cost of completing homes on the improved property. Advances on construction loans are made in accordance with a schedule reflecting the cost of construction. The maximum amount of the loan is generally limited to the lower of 80.0% of the appraised value of the property, as completed, or the property’s cost of construction. For construction loans on residential units being constructed without a pre-sale agreement, the loan amount is limited to 75.0% of the appraised value of the property, as completed. Repayment of construction loans on residential subdivisions is normally expected from the sale of units to individual purchasers. In the case of income-producing property, repayment is usually expected from permanent financing upon completion of construction. Benjamin Franklin Bank commits to provide the permanent mortgage financing on most of its construction loans on income-producing property.

          For owner-occupied, one-to-four family properties, Benjamin Franklin Bank will lend up to 95.0% of the lesser of appraised value upon completion of construction or the cost of construction, provided that private mortgage insurance coverage is obtained for any loan with a loan-to-value or loan-to-cost in excess of 80.0%.

          Land acquisition, development and construction lending exposes Benjamin Franklin Bank to greater credit risk than residential mortgage lending to owner occupants. The repayment of these loans depends on the sale of the property to third parties or the availability of permanent financing upon completion of all improvements, and on the business and financial condition of the borrowers. In the event Benjamin Franklin Bank makes an acquisition loan on property that is not yet approved for the planned development, there is the risk that approvals will not be granted or will be delayed. Development and construction loans also expose Benjamin Franklin Bank to the risk that improvements will not be completed on time in accordance with specifications and projected costs. In addition, the ultimate sale or rental of the property may not occur as anticipated. These events, as well as economic events and changes in government regulations could have an adverse impact on the value of properties securing construction loans and on the borrowers’ ability to repay. See “Risk Factors-Our Commercial Real Estate, Construction and Commercial Business Loans May Expose Us To Increased Credit Risks” on page [#].

          Home Equity Lines-of-Credit and Loans. Benjamin Franklin Bank offers home equity lines-of-credit and home equity term loans. Benjamin Franklin Bank originated $17.1 million and $13.4 million of home equity lines-of-credit and loans during 2003 and during the first nine months of 2004, respectively, and has $21.9 million of home equity lines-of-credit and loans outstanding at September 30, 2004, representing 5.8% of the loan portfolio at that date.

          Home equity lines-of-credit and loans are secured by second mortgages on one-to-four family owner occupied properties, and are made in amounts such that the combined first and second mortgage balances do not exceed 80.0% of the value of the property serving as collateral. The lines-of-credit are available to be drawn upon for 10 years, at the end of which time they become term loans amortized over 10 years. Interest rates on home equity lines normally adjust based on Benjamin Franklin Bank’s prime rate of interest. The undrawn portion of home equity lines-of-credit total $28.8 million at September 30, 2004.

          Commercial Business Loans. Benjamin Franklin Bank originates secured and unsecured commercial business loans to business customers in its market area for the purpose of financing equipment purchases, working capital, expansion and other general business purposes. Benjamin Franklin Bank originated $1.6 million and $1.7 million in commercial business loans during 2003 and during the

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first nine months of 2004, respectively, and had $5.0 million in commercial business loans in its portfolio, representing 1.3% of such portfolio, as of September 30, 2004. Benjamin Franklin Bank intends to grow this segment of its lending business in the future.

          Benjamin Franklin Bank’s commercial business loans are generally collateralized by equipment, accounts receivable and inventory, supported by personal guarantees. Benjamin Franklin Bank offers both term and revolving commercial loans. The former have either fixed or adjustable-rates of interest and generally fully amortize over a term of between three and seven years. Revolving loans are written for a one year term, renewable annually, with floating interest rates that are indexed to Benjamin Franklin Bank’s prime rate of interest.

          When making commercial business loans, Benjamin Franklin Bank considers the financial statements of the borrower, the borrower’s payment history with respect to both corporate and personal debt, the debt service capabilities of the borrower, the projected cash flows of the business, the viability of the industry in which the borrower operates and the value of the collateral. Benjamin Franklin Bank’s commercial business loans are not concentrated in any one industry.

          Commercial business loans generally bear higher interest rates than residential mortgage loans of like duration because they involve a higher risk of default since their repayment is generally dependent on the successful operation of the borrower’s business and the sufficiency of collateral, if any. Because commercial business loans often depend on the successful operation or management of the business, repayment of such loans may be affected by adverse changes in the economy. Further, collateral securing such loans may depreciate in value over time, may be difficult to appraise and to liquidate, and may fluctuate in value. See “Risk Factors-Our Commercial Real Estate, Construction and Commercial Business Loans May Expose Us To Increased Credit Risks” on page [#].

          Consumer and Other Loans. Benjamin Franklin Bank offers a variety of consumer and other loans, including auto loans and loans secured by passbook savings or certificate accounts. Benjamin Franklin Bank originated $1.6 million and $1.1 million of consumer and other loans during 2003 and during the first nine months of 2004, respectively, and has $1.9 million of consumer and other loans outstanding at September 30, 2004, representing 0.5% of the loan portfolio at that date.

          Loan Origination and Underwriting. Loan originations come from a variety of sources. The primary source of originations are our salaried and commissioned loan personnel, and to a lesser extent, local mortgage brokers, advertising and referrals from customers. From time to time Benjamin Franklin Bank purchases adjustable-rate residential mortgages from mortgage correspondents in the greater Boston area with whom the Bank has established relationships. Benjamin Franklin Bank also occasionally purchases participation interests in commercial real estate loans from banks located in the Boston area. Benjamin Franklin Bank underwrites such residential and commercial purchased loans using its own underwriting criteria.

          Benjamin Franklin Bank issues loan commitments to prospective borrowers conditioned on the occurrence of certain events. Commitments are made in writing on specified terms and conditions and are generally honored for up to 60 days from approval. At September 30, 2004, Benjamin Franklin Bank had loan commitments and unadvanced loans and lines-of-credit totaling $52.9 million. For information about Benjamin Franklin Bank’s loan commitments outstanding as of September 30, 2004, see “Management’s Discussion and Analysis of Benjamin Franklin Bancorp-Financial Condition and Results of Operations-Quantitative and Qualitative Disclosure About Risk Management-Liquidity Risk Management” on page [#].

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          Benjamin Franklin Bank charges origination fees, or points, and collects fees to cover the costs of appraisals and credit reports on most residential mortgage loans originated. Benjamin Franklin Bank also collects late charges on real estate loans, and origination fees and prepayment penalties on commercial mortgage loans. For information regarding Benjamin Franklin Bank’s recognition of loan fees and costs, please refer to Note 1 to the Consolidated Financial Statements of Benjamin Franklin Bancorp beginning on page [#].

          The following table sets forth certain information concerning Benjamin Franklin Bank’s portfolio loan originations, inclusive of loan purchases:

                                                         
    For the Nine Months    
    Ended September 30,
   For the Years Ended December 31,
    2004
   2003
   2003
   2002
   2001
   2000
   1999
                    (Dollars in thousands)                        
Loans at beginning of period
   $ 290,660     $ 263,662     $ 263,662     $ 258,169     $ 284,637     $ 269,817     $ 244,584  
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		  
Originations:
                                                        
Mortgage loans on real estate:
                                                        
Residential
     103,120       172,210       183,263       151,241       94,461       32,084       67,027  
Commercial
     17,659       18,280       27,105       23,383       9,371       6,929       5,759  
Construction
     25,612       11,152       16,176       22,524       32,301       27,975       39,585  
Home equity
     13,350       13,584       17,115       14,509       9,104       8,071       6,794  
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		  
 
     159,741       215,226       243,659       211,657       145,237       75,059       119,165  
Other loans:
                                                        
Commercial business
     1,724       570       1,584       1,310       1,933       5,754       2,604  
Consumer and other
     1,126       1,281       1,625       1,953       3,502       3,131       4,073  
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		  
 
     2,850       1,851       3,209       3,263       5,435       8,885       6,677  
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		  
Total loans originated
     162,591       217,077       246,868       214,920       150,672       83,944       125,842  
Purchases of mortgage loans
     34,207       26,332       26,546       1,298       853       11,739       0  
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		  
Deduct:
                                                        
Principal loan repayments and prepayments
     81,534       132,286       149,623       140,554       114,717       74,067       87,570  
Loan sales
     28,566       92,606       96,256       69,752       63,244       6,645       12,678  
Charge-offs
     9       63       537       419       32       151       361  
Transfers to OREO
     0       0       0       0       0       0       0  
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		  
Total deductions
     110,109       224,955       246,416       210,725       177,993       80,863       100,609  
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		  
Net increase/(decrease) in loans
     86,689       18,454       26,998       5,493       (26,468 )     14,820       25,233  
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		  
Loans at end of period
   $ 377,349     $ 282,116     $ 290,660     $ 263,662     $ 258,169     $ 284,637     $ 269,817  
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		  

          Residential mortgage loans are underwritten by the Bank’s staff of residential loan underwriters. Conforming loans sold to Freddie Mac or Fannie Mae require the approval of the Senior Underwriter. Residential mortgage loans of less than $500,000 to be held in portfolio require the approval of the Senior Residential Loan Officer. Residential mortgage loans of $500,000 or more but less than $1 million require the approval of the management Credit Committee. Residential mortgage loans $1 million or greater require the approval of the Executive Committee of the Board.

          Commercial real estate and commercial business loans are underwritten by commercial credit analysts. For commercial real estate loans, loan officers may approve loans up to $75,000, while loans up to $300,000 may be approved by the Senior Commercial Loan Officer. Commercial real estate loans of up to $750,000 may be approved by the management Credit Committee. For Commercial business loans, individual loan officer authority is limited to $65,000 ($25,000 for unsecured loans). The Senior

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Commercial Loan Officer may approve commercial business loans of up to $100,000 ($50,000 if unsecured), while the management Credit Committee may approve loans of up to $200,000 ($50,000 if unsecured). Loans over these limits require the approval of the Executive Committee of the Board.

           Consumer loans, including home equity loans and lines-of-credit, are underwritten by consumer loan underwriters. Loan officers and Branch Managers have approval authorities ranging from $25,000 to $35,000 ($3,500 to $10,000 if unsecured) for these loans. The Senior Residential Loan Officer may approve consumer loans of up to $100,000 ($25,000 if unsecured) while the management Credit Committee may approve loans of up to $300,000 ($25,000 if unsecured). All consumer loans in excess of these limits require the approval of the Executive Committee of the Board.

          Pursuant to its loan policy, Benjamin Franklin Bank generally will not make loans aggregating more than $5.0 million to one borrower (or related entity). Exceptions to this limit require the approval of the Executive Committee of the Board prior to loan origination. Benjamin Franklin Bank’s internal lending limit is lower than the Massachusetts legal lending limit, which is 20.0% of a bank’s surplus and capital stock accounts, or $7.3 million for Benjamin Franklin Bank as of September 30, 2004.

          Benjamin Franklin Bank has established a risk rating system for its commercial real estate, construction and commercial loans. This system evaluates a number of factors useful in indicating the risk of default and risk of loss associated with a loan. These ratings are performed by commercial credit analysts who do not have responsibility for loan originations. See "-Asset Quality-Classification of Assets and Loan Review” on page [#].

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          Loan Maturity. The following table summarizes the scheduled repayments of Benjamin Franklin Bank’s loan portfolio at September 30, 2004. Demand loans, loans having no stated repayment schedule, and overdraft loans are reported as being due in one year or less:

                                                 
    Residential Mortgage
   Commercial Mortgage
   Construction
            Weighted           Weighted           Weighted
            Average           Average           Average
    Amount
   Rate
   Amount
   Rate
   Amount
   Rate
    (Dollars in thousands)
Due less than one year
   $ 12,242       5.07 %   $ 5,242       6.05 %   $ 15,027       6.51 %
Due after one year to five years
     42,217       4.99 %     17,429       5.84 %     1,510       5.58 %
Due after five years
     189,904       4.77 %     56,502       5.79 %     8,542       5.50 %
 
    
 		              
 		              
 		          
Total
   $ 244,363       4.82 %   $ 79,173       5.82 %   $ 25,079       6.11 %
 
    
 		              
 		              
 		          
                                                 
                    Home Equity,    
    Commercial Business
   Consumer and Other
   Total
            Weighted           Weighted           Weighted
            Average           Average           Average
    Amount
   Rate
   Amount
   Rate
   Amount
   Rate
                    (Dollars in thousands)                
Due less than one year
   $ 2,202       6.80 %   $ 12,215       4.86 %   $ 46,928       5.67 %
Due after one year to five years.
     1,696       7.38 %     1,250       6.63 %     64,102       5.33 %
Due after five years
     1,074       6.98 %     10,297       4.63 %     266,319       5.01 %
 
    
 		              
 		              
 		          
Total
   $ 4,972       7.04 %   $ 23,762       4.85 %   $ 377,349       5.15 %
 
    
 		              
 		              
 		          

          The following table sets forth, at September 30, 2004, the dollar amount of total loans, net of unadvanced funds on loans, contractually due after September 30, 2004 and whether such loans have fixed interest rates or adjustable interest rates.

                         
    Fixed
   Adjustable
   Total
    (Dollars in thousands)
Residential mortgage
   $ 97,940     $ 146,423     $ 244,363  
Commercial mortgage
     24,601       54,572       79,173  
Construction
     20,669       4,410       25,079  
Commercial business
     2,494       2,478       4,972  
Home equity, consumer and other
     3,878       19,884       23,762  
 
    
 		      
 		      
 		  
Total Loans
   $ 149,582     $ 227,767     $ 377,349  
 
    
 		      
 		      
 		  

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Asset Quality

          General. One of Benjamin Franklin Bank’s most important operating objectives is to maintain a high level of asset quality. Management uses a number of strategies in furtherance of this goal including maintaining sound credit standards in loan originations, monitoring the loan portfolio through internal and third-party loan reviews, and employing active collection and workout processes for delinquent or problem loans.

          Delinquent Loans. Management performs a monthly review of all delinquent loans. The actions taken with respect to delinquencies vary depending upon the nature of the delinquent loans and the period of delinquency. Generally, the Bank’s requirement is that a delinquency notice be mailed no later than the 10th or 16th day, depending on loan type, after the payment due date. A late charge is normally assessed on loans where the scheduled payment remains unpaid after a 10 or 15 day grace period. After mailing delinquency notices Benjamin Franklin Bank’s loan collection personnel call the borrower to ascertain the reasons for delinquency and the prospects for repayment. On loans secured by one-to-four family owner-occupied property, Benjamin Franklin Bank initially attempts to work out a payment schedule with the borrower in order to avoid foreclosure. Any such loan restructurings must be approved by the level of officer authority required for a new loan of that amount. If these actions do not result in a satisfactory resolution, Benjamin Franklin Bank refers the loan to legal counsel and counsel initiates foreclosure proceedings. For commercial real estate, construction and commercial business loans, collection procedures may vary depending on individual circumstances.

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          The following table sets forth delinquencies in Benjamin Franklin Bank’s loan portfolio as of the dates indicated:

                                                  
    Loans Delinquent For
    
    60-89 Days
   90 Days and Over
   Total
    Number
   Amount
   Number
   Amount
   Number
   Amount
    (Dollars in thousands)
At September 30, 2004
                                                
Residential mortgage
     —     $ —       1     $ 64       1     $ 64  
Commercial mortgage
     —       —       —       —       —       —  
Construction
     —       —       —       —       —       —  
Commercial business
     1       10       —       —       1       10  
Home equity, consumer and other
     15       11       5       1       20       12  
 
    
 		      
 		      
 		      
 		      
 		      
 		  
Total
     16     $ 21       6     $ 65       22     $ 86  
 
    
 		      
 		      
 		      
 		      
 		      
 		  
At December 31, 2003
                                                
Residential mortgage
     5     $ 538       —     $ —       5     $ 538  
Commercial mortgage
     —       —       —       —       —       —  
Construction
     —       —       —       —       —       —  
Commercial business
     1       160       —       —       1       160  
Home equity, consumer and other
     12       12       8       5       20       17  
 
    
 		      
 		      
 		      
 		      
 		      
 		  
Total
     18     $ 710       8     $ 5       26     $ 715  
 
    
 		      
 		      
 		      
 		      
 		      
 		  
At December 31, 2002
                                                
Residential mortgage
     1     $ 41       —     $ —       1     $ 41  
Commercial mortgage
     —       —       —       —       —       —  
Construction
     —       —       —       —       —       —  
Commercial business
     —       —       —       —       —       —  
Home equity, consumer and other
     3       13       1       2       4       15  
 
    
 		      
 		      
 		      
 		      
 		      
 		  
Total
     4     $ 54       1     $ 2       5     $ 56  
 
    
 		      
 		      
 		      
 		      
 		      
 		  

          Other Real Estate Owned. Benjamin Franklin Bank classifies property acquired through foreclosure or acceptance of a deed in lieu of foreclosure as other real estate owned (“OREO”) in its financial statements. When property is placed into OREO, it is recorded at the lower of the carrying value or the fair value less estimated costs to sell at the date of foreclosure or acceptance of deed in lieu of foreclosure. At the time of transfer to OREO, any excess of carrying value over fair value is charged to the allowance for loan losses. Management inspects all OREO property periodically. Holding costs and declines in fair value result in charges to expense after the property is acquired. At September 30, 2004, Benjamin Franklin Bank had no property classified as OREO.

          Classification of Assets and Loan Review. Benjamin Franklin Bank uses an internal rating system to monitor business and evaluate the credit risk inherent in its loan portfolio. At the time a loan is approved, all commercial real estate, construction and commercial business loans are assigned a risk rating based on all of the factors considered in originating the loan. The initial risk rating is recommended by the credit analyst charged with underwriting the loan, and subsequently approved by the relevant loan approval authority. Current financial information is sought for all commercial real estate, construction and commercial business borrowing relationships, and is evaluated on at least an annual basis to determine whether the risk rating classification is appropriate.

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          In Benjamin Franklin Bank’s loan rating system, there are three classifications for problem assets: Substandard, Doubtful and Loss. An asset is considered Substandard if it is inadequately protected by the current net worth and paying capacity of the borrower or of the collateral pledged, if any. Substandard assets are characterized by the distinct possibility that Benjamin Franklin Bank will sustain some loss if the deficiencies are not corrected. Doubtful assets have the weaknesses of Substandard assets with the additional characteristic that the weaknesses make collection or liquidation in full questionable, on the basis of currently existing facts, and there is a high possibility of loss. Assets classified Loss are considered uncollectible and of such little value that continuance as an asset of Benjamin Franklin Bank is not warranted. Assets that possess some weaknesses, but that do not expose Benjamin Franklin Bank to risk sufficient to warrant classification in one of the aforementioned categories, are designated as Special Mention. If an asset or portion thereof is classified as Loss, it is charged off in the quarter in which it is so classified. For assets designated as Special Mention, Substandard or Doubtful, Benjamin Franklin Bank establishes reserves in amounts management deems appropriate within the allowance for loan losses. This determination as to the classification of assets and the amount of the loss allowances established are subject to review by regulatory agencies, which can order the establishment of additional loss allowances. See “-Asset Quality-Allowance for Loan Losses” on page [#] and “Management’s Discussion and Analysis of Benjamin Franklin Bancorp-Critical Accounting Policies-Allowance for Loan Losses” on page [#].

          Benjamin business Franklin Bank engages an independent third party to conduct a semi-annual review of its commercial real estate, construction and commercial business loan portfolios. These loan reviews, which annually typically include a 70.0% penetration of the various commercial portfolios, provide a credit evaluation of individual loans to determine whether the risk ratings assigned are appropriate. In addition, independent loan reviews are performed on a quarterly basis for the residential mortgage portfolio, based on a sampling of newly originated loans during the period. Independent loan review findings are presented directly to the Executive Committee of the Board of Directors.

          At September 30, 2004, loans classified Substandard totaled $3.2 million, consisting of $2.4 million in commercial real estate loans and $0.8 million in commercial loans. Special Mention loans totaled $2.1 million, consisting of $2.0 million in commercial real estate loans and $0.1 million in commercial loans. One commercial loan in the amount of $10,000 was classified as Doubtful and no loans were classified as Loss on September 30, 2004.

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          Non-Performing Assets. The table below sets forth the amounts and categories of our non-performing assets at the dates indicated. At each date presented, we had no troubled debt restructurings (loans for which a portion of interest or principal has been forgiven and loans modified at interest rates materially less than current market rates).

                                                 
       
    At
September		   At December 31,
    30, 2004
   2003
   2002
   2001
   2000
   1999
    (Dollars in thousands)
Non-accrual loans:
                                                
Residential mortgage
   $ —     $ —     $ —     $ —     $ —     $ —  
Commercial mortgage
     —       —       —       —       —       —  
Construction
     —       —       —       —       —       —  
Commercial business
     357       458       —       157       —       —  
Home equity, consumer and other
     —       —       —       —       —       —  
 
    
 		      
 		      
 		      
 		      
 		      
 		  
Total non-accrual loans
     357       458       —       157       —       —  
 
    
 		      
 		      
 		      
 		      
 		      
 		  
Loans greater than 90 days delinquent and still accruing:
                                                
Residential mortgage
     64       —       —       —       177       180  
Commercial mortgage
     —       —       —       —       —       —  
Construction
     —       —       —       —       —       —  
Commercial business
     —       —       —       —       —       —  
Home equity, consumer and other
     1       5       2       —       —       —  
 
    
 		      
 		      
 		      
 		      
 		      
 		  
Total loans 90 days delinquent and still accruing
     65       5       2       0       177       180  
 
    
 		      
 		      
 		      
 		      
 		      
 		  
Total non-performing loans
     422       463       2       157       177       180  
 
    
 		      
 		      
 		      
 		      
 		      
 		  
Total non-performing assets
   $ 422     $ 463     $ 2     $ 157     $ 177     $ 180  
 
    
 		      
 		      
 		      
 		      
 		      
 		  
Ratios:
                                                
Non-performing loans to total loans
     0.11 %     0.16 %     0.00 %     0.06 %     0.06 %     0.07 %
Non-performing assets to total assets
     0.08 %     0.10 %     0.00 %     0.04 %     0.04 %     0.04 %

          Loans are placed on non-accrual status either when reasonable doubt exists as to the full timely collection of interest and principal, or when a loan becomes 90 days past due unless an evaluation by the management Credit Committee clearly indicates that the loan is well-secured and in the process of collection.. Restructured loans represent performing loans for which concessions were granted due to a borrower’s financial condition. Such concessions may include reductions of interest rates to below-market terms and/or extension of repayment terms.

          Allowance for Loan Losses. In originating loans, Benjamin Franklin Bank recognizes that losses will be experienced on loans and that the risk of loss will vary with many factors, including the type of loan being made, the creditworthiness of the borrower over the term of the loan, general economic conditions and, in the case of a secured loan, the quality of the security for the loan over the term of the loan. Benjamin Franklin Bank maintains an allowance for loan losses to absorb losses inherent in the loan portfolio, and as such, this allowance represents management’s best estimate of the probable known and inherent credit losses in the loan portfolio as of the date of the financial statements.

          The allowance for loan losses is evaluated on a regular basis by management and is based upon management’s periodic review of the collectibility of the loans in light of historical experience, portfolio volume and mix, geographic and large borrower concentrations, estimated credit losses based on internal and external portfolio reviews, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available.

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          The allowance consists of specific, general and unallocated components. The specific component relates to loans that are classified as either doubtful, substandard or special mention. See “-Asset Quality-Classification of Assets and Loan Review” on page [#]. For such loans that are also classified as impaired, an allowance is established when the discounted cash flows or collateral value or observable market price of the impaired loan is lower than the carrying value of the loan. The general component covers non-classified loans and is based on historical loss experience adjusted for qualitative factors. An unallocated component is maintained to cover uncertainties that could affect management’s estimate of probable losses. The unallocated component of the allowance reflects the margin of imprecision inherent in the underlying assumptions used in the methodologies for estimating specific and general losses in the portfolio.

          A loan is considered impaired when, based on current information and events, it is probable that Benjamin Franklin Bank will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Impairment is measured on a loan by loan basis for commercial loans by either the present value of expected future cash flows discounted at the loan’s effective interest rate or the fair value of the collateral if the loan is collateral dependent. Large groups of smaller balance homogeneous loans are collectively evaluated for impairment. Accordingly, Benjamin Franklin Bank does not separately identify individual consumer and residential loans for impairment disclosures. At September 30, 2004, impaired loans totaled $357,000 and none of those loans carried a valuation allowance.

          While Benjamin Franklin Bank believes that it has established adequate specific and general allowances for losses on loans, adjustments to the allowance may be necessary if future conditions differ substantially from the information used in making the evaluations. In addition, as an integral part of their examination process, Benjamin Franklin Bank’s regulators periodically review the allowance for loan losses. These regulatory agencies may require the Bank to recognize additions to the allowance based on their judgments of information available to them at the time of their examination, thereby negatively affecting Benjamin Franklin Bank’s financial condition and earnings.

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     The following table sets forth activity in Benjamin Franklin Bank’s allowance for loan losses for the periods indicated:

                                                         
    At or For the    
    Nine Months Ended    
    September 30,
   At or For the Years Ended December 31,
    2004
   2003
   2003
   2002
   2001
   2000
   1999
    (Dollars in thousands)
Balance at beginning of period
   $ 2,523     $ 2,312     $ 2,312     $ 1,177     $ 1,068     $ 1,183     $ 1,418  
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		  
Charge-offs:
                                                        
Mortgage loans on real estate:
     —       —       —       —       —       —       —  
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		  
Other loans:
                                                        
Commercial business
     —       (43 )     (43 )     (389 )     (10 )     (138 )     (325 )
Consumer and other
     (9 )     (20 )     (494 )     (30 )     (22 )     (13 )     (36 )
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		  
Total other loans
     (9 )     (63 )     (537 )     (419 )     (32 )     (151 )     (361 )
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		  
Total charge-offs
     (9 )     (63 )     (537 )     (419 )     (32 )     (151 )     (361 )
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		  
Recoveries:
                                                        
Mortgage loans on real estate.
     —       —       —       —       20       20       —  
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		  
Other loans:
                                                        
Commercial business
     23       94       100       132       55       9       48  
Consumer and other
     10       7       23       10       15       6       8  
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		  
Total other loans
     33       101       123       142       70       15       56  
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		  
Total recoveries
     33       101       123       142       90       35       56  
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		  
Net (charge-offs) recoveries
     24       38       (414 )     (277 )     58       (116 )     (305 )
Provision for loan losses
     470       300       625       1,412       51       1       70  
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		  
Balance at end of period
   $ 3,017     $ 2,650     $ 2,523     $ 2,312     $ 1,177     $ 1,068     $ 1,183  
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		  
Ratios:
                                                        
Net (charge-offs) recoveries to average loans outstanding (annualized)
     0.01 %     0.01 %     (0.15 %)     (0.11 %)     0.02 %     (0.04 %)     (0.12 %)
Allowance for loan losses to non-performing loans at end of period
     714.93 %     394.35 %     544.92 %     115,600.00 %     749.68 %     603.39 %     657.22 %
Allowance for loan losses to total loans at end of period
     0.80 %     0.95 %     0.87 %     0.88 %     0.46 %     0.38 %     0.44 %

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     The following tables set forth Benjamin Franklin Bank’s percent of allowance by loan category and the percent of the loans to total loans in each of the categories listed at the dates indicated. The allowance for loan losses allocated to each category is not necessarily indicative of future losses in any particular category and does not restrict the use of the allowance to absorb losses in other categories:

                                                                         
                            At December 31,
    At September 30, 2004
   2003
   2002
                    Percent                   Percent                   Percent
                    of Loans                   of Loans                   of Loans
            Loan   in Each           Loan   in Each           Loan   in Each
    Allowance   Balances   Category   Allowance   Balances   Category   Allowance   Balances   Category
    for Loan   by   to Total   for Loan   by   to Total   for Loan   by   to Total
    Losses
   Category
   Loans
   Losses
   Category
   Loans
   Losses
   Category
   Loans
    (Dollars in thousands)
Mortgage loans on real estate:
                                                                        
Residential
   $ 615     $ 244,363       64.76 %   $ 485     $ 172,123       59.22 %   $ 552     $ 165,007       62.58 %
Commercial
     1,279       79,173       20.98 %     1,136       68,652       23.62 %     549       51,357       19.48 %
Construction
     358       25,079       6.64 %     338       23,936       8.23 %     422       21,082       8.00 %
Home equity
     127       21,883       5.80 %     108       18,171       6.25 %     82       16,507       6.26 %
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		  
 
     2,379       370,498       98.18 %     2,067       282,882       97.32 %     1,605       253,953       96.32 %
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		  
Other loans:
                                                                        
Commercial
     400       4,972       1.32 %     421       5,559       1.92 %     181       6,552       2.48 %
Consumer and other
     24       1,879       0.50 %     27       2,219       0.76 %     276       3,157       1.20 %
Unallocated
     214       0       0.00 %     8       0       0.00 %     250       0       0.00 %
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		  
 
     638       6,851       1.82 %     456       7,778       2.68 %     707       9,709       3.68 %
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		  
Total
   $ 3,017     $ 377,349       100.00 %   $ 2,523     $ 290,660       100.00 %   $ 2,312     $ 263,662       100.00 %
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		  
                                                                         
    At December 31,
    2001
   2000
   1999
                    Percent                   Percent                   Percent
                    of Loans                   of Loans                   of Loans
            Loan   in Each           Loan   in Each           Loan   in Each
    Allowance   Balances   Category   Allowance   Balances   Category   Allowance   Balances   Category
    for Loan   by   to Total   for Loan   by   to Total   for Loan   by   to Total
    Losses
   Category
   Loans
   Losses
   Category
   Loans
   Losses
   Category
   Loans
    (Dollars in thousands)
Mortgage loans on real estate:
                                                                        
Residential
   $ 433     $ 172,959       66.99 %   $ 517     $ 206,918       72.69 %   $ 508     $ 190,027       70.43 %
Commercial
     236       45,532       17.64 %     227       44,456       15.62 %     250       43,734       16.21 %
Construction
     143       19,106       7.40 %     98       13,117       4.61 %     194       19,429       7.20 %
Home equity
     28       11,161       4.32 %     25       9,778       3.44 %     28       8,167       3.03 %
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		  
 
     840       248,758       96.35 %     867       274,269       96.36 %     980       261,357       96.87 %
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		  
Other loans:
                                                                        
Commercial
     90       5,512       2.14 %     94       5,951       2.09 %     91       4,649       1.72 %
Consumer and other
     30       3,899       1.51 %     33       4,417       1.55 %     19       3,811       1.41 %
Unallocated
     217       0       0.00 %     74       0       0.00 %     93       0       0.00 %
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		  
 
     337       9,411       3.65 %     201       10,368       3.64 %     203       8,460       3.13 %
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		  
Total
   $ 1,177     $ 258,169       100.00 %   $ 1,068     $ 284,637       100.00 %   $ 1,183     $ 269,817       100.00 %
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		  

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Investment Activities

     General. Benjamin Franklin Bank’s investment policy is established by its Board of Directors. The Chief Executive Officer, Chief Financial Officer and Treasurer, as authorized by the Board, implement this policy based on the established guidelines within the written policy. The primary objective of the investment portfolio is to achieve a competitive rate of return without incurring undue interest rate and credit risk, to complement Benjamin Franklin Bank’s lending activities, to provide and maintain liquidity, and to assist in managing the interest rate sensitivity of its balance sheet. Individual investment decisions are made based on the safety of the investment, liquidity requirements, potential returns, cash flow targets, and consistency with Benjamin Franklin Bank’s asset/liability management objectives.

     SFAS NO. 115 requires Benjamin Franklin Bank to designate its securities as held to maturity, available for sale or trading, depending on Benjamin Franklin Bank’s intent with regard to its investments at the time of purchase. At September 30, 2004, $94.4 million or 92.9% of the portfolio was classified as available for sale, and $0.3 million or 0.3% of the portfolio was classified as held to maturity. At September 30, 2004, the net unrealized loss on securities classified as available for sale was $2.2 million. Benjamin Franklin Bank does not currently maintain a trading portfolio of securities.

     U.S. Government and Agency Obligations. At September 30, 2004, Benjamin Franklin Bank’s U.S. Government and Agency securities portfolio totaled $37.5 million or 36.9% of the total portfolio on that date.

     Corporate Obligations. At September 30, 2004, Benjamin Franklin Bank’s portfolio of corporate obligations totaled $5.1 million, or 5.0% of the portfolio at that date. Benjamin Franklin Bank’s policy requires that investments in corporate obligations be restricted only to those obligations that are readily marketable and rated ‘A’ or better by a nationally recognized rating agency at the time of purchase. At September 30, 2004, all investments in corporate obligations were rated ‘A’ or better.

     Mortgage-Backed Securities. At September 30, 2004, Benjamin Franklin Bank’s portfolio of mortgage-backed securities totaled $52.1 million, or 51.3% of the total portfolio on that date, and consisted of pass-through securities ($4.5 million) and collateralized mortgage obligations ($47.6 million) directly insured or guaranteed by Freddie Mac, Fannie Mae or the Government National Mortgage Association (Ginnie Mae). In its purchase of collateralized mortgage obligations, Benjamin Franklin Bank has targeted instruments in the three to five year weighted average life tranches, with expected average life extensions up to a maximum of seven years in a rising rate environment. The objective of this strategy has been to limit the potential interest rate risk due to extension of this portfolio in a rising rate environment.

     Restricted Equity Securities. At September 30, 2004, Benjamin Franklin Bank’s portfolio of restricted equity securities totaled $6.9 million or 6.8% of the total portfolio at that date. These securities consisted primarily of stock in the Federal Home Loan Bank of Boston ($4.3 million) which must be held as a condition of membership in the Federal Home Loan Bank System and as a condition to Benjamin Franklin Bank’s borrowing under the Federal Home Loan Bank of Boston advance program. The remainder ($2.5 million) consisted of certain other equity investments in Savings Bank Life Insurance, the Community Investment Fund and the Depositors Insurance Fund (“DIF”).

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     The following table sets forth certain information regarding the amortized cost and market values of Benjamin Franklin Bank’s investment securities at the dates indicated:

                                                                 
                    At December 31,
    At September 30, 2004
   2003
   2002
   2001
    Amortized   Fair   Amortized   Fair   Amortized   Fair   Amortized   Fair
    Cost
   Value
   Cost
   Value
   Cost
   Value
   Cost
   Value
                            (Dollars in thousands)                        
Securities available for sale:
                                                                
U.S. Government and agency obligations
   $ 37,691     $ 37,492     $ 30,272     $ 30,347     $ 67,513     $ 67,582     $ 38,506     $ 39,113  
State agency and municipal obligations
     0       0       0       0       570       570       1,942       1,915  
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		  
 
     37,691       37,492       30,272       30,347       68,083       68,152       40,488       41,028  
Corporate bonds and other obligations
     5,086       5,057       0       0       3,536       3,716       23,091       23,214  
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		  
 
     42,777       42,549       30,272     $ 30,347       71,619       71,868       63,539       64,242  
Mortgage-backed securities
     53,869       51,874       74,502       72,299       26,376       26,446       13,432       13,536  
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		  
Total debt securities
     96,646       94,423       104,774       102,646       97,995       98,314       76,971       77,778  
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		  
Marketable equity securities:
                                                                
Bank Investment Fund—Fund One
     0       0       0       0       10,206       10,206       0       0  
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		  
Total securities available for sale
   $ 96,646     $ 94,423     $ 104,774     $ 102,646     $ 108,201     $ 108,520     $ 76,971     $ 77,778  
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		  
Securities held to maturity:
                                                                
Mortgage-backed securities
   $ 266     $ 271     $ 386     $ 398     $ 986     $ 1,023     $ 2,749     $ 2,774  
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		  
Restricted equity securities:
                                                                
Federal Home Loan Bank of Boston stock
   $ 4,347     $ 4,347     $ 3,707     $ 3,707     $ 3,707     $ 3,707     $ 3,707     $ 3,707  
Access Capital Strategies Community Investment Fund
     2,000       2,000       3,000       3,000       1,000       1,000       1,000       1,000  
Savings Bank Life Insurance and Depositors Insurance Fund stock
     515       515       515       515       515       515       902       902  
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		  
Total restricted equity securities
   $ 6,862     $ 6,862     $ 7,222     $ 7,222     $ 5,222     $ 5,222     $ 5,609     $ 5,609  
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		  

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     The table below sets forth certain information regarding the amortized cost, weighted average yields and contractual maturities of Benjamin Franklin Bank’s debt securities portfolio at September 30, 2004. In the case of mortgage-backed securities, the table shows the securities by their contractual maturities, however there are scheduled principal payments for these securities and there will also be unscheduled prepayments prior to their contractual maturity:

                                                 
                    More than One Year   More than Five Years
    One Year or Less
   through Five Years
   through Ten Years
            Weighted           Weighted           Weighted
    Amortized   Average   Amortized   Average   Amortized   Average
    Cost
   Yield
   Cost
   Yield
   Cost
   Yield
                    (Dollars in thousands)                
Securities available for sale:
                                                
U.S. Government and agency securities
   $ 15,152       1.71 %   $ 22,539       2.26 %   $ 0       —  
Corporate bonds and other obligations.
     1,480       2.35 %     3,606       2.41 %     0       —  
Mortgage-backed securities:
     7       7.50 %     35       6.50 %     6,475       3.74 %
 
    
 		              
 		              
 		          
Total debt securities
     16,639       1.77 %     26,180       2.29 %     6,475       3.74 %
 
    
 		              
 		              
 		          
Securities held to maturity:
                                                
Mortgage-backed securities
     0       —       221       6.00 %     0       —  
 
    
 		              
 		              
 		          
Total investment securities
   $ 16,639       1.77 %   $ 26,401       2.32 %   $ 6,475       3.74 %
 
    
 		              
 		              
 		          
                                         
    More than Ten Years
   Total Securities
            Weighted                   Weighted
    Amortized   Average   Amortized   Fair   Average
    Cost
   Yield
   Cost
   Value
   Yield
    (Dollars in thousands)
Securities available for sale:
                                        
U.S. Government and agency securities
   $ 0       —     $ 37,691     $ 37,492       2.04 %
Corporate bonds and other obligations.
     0       —       5,086       5,057       2.39 %
Mortgage-backed securities:
     47,352       4.20 %     53,869       51,874       4.15 %
 
    
 		              
 		      
 		          
Total debt securities
     47,352       4.20 %     96,646       94,423       3.23 %
 
    
 		              
 		      
 		          
Securities held to maturity:
                                        
Mortgage-backed securities
     45       6.00 %     266       271       6.00 %
 
    
 		              
 		      
 		          
Total investment securities
   $ 47,397       4.21 %   $ 96,912     $ 94,694       3.24 %
 
    
 		              
 		      
 		          

Sources of Funds

     General. Deposits are the primary source of Benjamin Franklin Bank’s funds for lending and other investment purposes. In addition to deposits, Benjamin Franklin Bank obtains funds from the amortization and prepayment of loans and mortgage-backed securities, the sale or maturity of investment securities, advances from the Federal Home Loan Bank of Boston, and cash flows generated by operations.

     Deposits. Consumer and commercial deposits are gathered primarily from Benjamin Franklin Bank’s primary market area through the offering of a broad selection of deposit products including

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checking, regular savings, money market deposits and time deposits, including certificate of deposit accounts and individual retirement accounts. The FDIC insures deposits up to certain limits (generally, $100,000 per depositor) and the DIF fully insures amounts in excess of such limits.

     The maturities of Benjamin Franklin Bank’s certificate of deposit accounts range from three months to four years. In addition, Benjamin Franklin Bank offers a variety of commercial business products to small businesses operating within its primary market area. Currently, Benjamin Franklin Bank does not generally negotiate interest rates to attract jumbo certificates of deposit, but accepts deposits of $100,000 or more from customers within its market area based on posted rates. Benjamin Franklin Bank does not use brokers to obtain deposits.

     Benjamin Franklin Bank relies primarily on competitive pricing of its deposit products, customer service and long-standing relationships with customers to attract and retain deposits. Market interest rates, rates offered by financial service competitors, the availability of other investment alternatives, and general economic conditions significantly affect Benjamin Franklin Bank’s ability to attract and retain deposits.

     The following tables set forth certain information relative to the composition of Benjamin Franklin Bank’s deposit accounts and the weighted average interest rate on each category of deposits:

                                                 
    At September 30, 2004
   At December 31, 2003
                    Weighted                   Weighted
                    Average                   Average
    Balance
   Percent
   Rate
   Balance
   Percent
   Rate
                    (Dollars in thousands)                
Deposit type:
                                                
Demand deposits
   $ 86,605       21.68 %     0.00 %   $ 85,681       22.53 %     0.00 %
NOW deposits
     25,179       6.30 %     0.14 %     24,581       6.47 %     0.15 %
Money market deposits
     54,390       13.61 %     1.14 %     50,094       13.17 %     0.83 %
Regular savings
     99,799       24.98 %     0.50 %     96,118       25.28 %     0.50 %
 
    
 		      
 		              
 		      
 		          
Total transaction accounts
     265,973       66.57 %     0.43 %     256,474       67.45 %     0.36 %
Certificates of deposit
     133,589       33.43 %     2.35 %     123,783       32.55 %     2.55 %
 
    
 		      
 		              
 		      
 		          
Total deposits
   $ 399,562       100.00 %     1.07 %   $ 380,257       100.00 %     1.08 %
 
    
 		      
 		              
 		      
 		          
                                                 
    At December 31,
    2002
   2001
                    Weighted                   Weighted
                    Average                   Average
    Balance
   Percent
   Rate
   Balance
   Percent
   Rate
                    (Dollars in thousands)                
Deposit type:
                                                
Demand deposits
   $ 36,730       9.84 %     0.00 %   $ 36,744       10.18 %     0.00 %
NOW deposits
     79,904       21.41 %     0.14 %     68,429       18.96 %     0.36 %
Money market deposits
     44,177       11.83 %     0.87 %     37,876       10.49 %     1.60 %
Regular savings
     87,536       23.45 %     0.50 %     77,323       21.42 %     0.75 %
 
    
 		      
 		              
 		      
 		          
Total transaction accounts
     248,347       66.53 %     0.38 %     220,372       61.05 %     0.65 %
Certificates of deposit
     124,953       33.47 %     3.09 %     140,607       38.95 %     3.99 %
 
    
 		      
 		              
 		      
 		          
Total deposits
   $ 373,300       100.00 %     1.28 %   $ 360,979       100.00 %     1.95 %
 
    
 		      
 		              
 		      
 		          

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     The following table sets forth the time deposits of Benjamin Franklin Bank classified by interest rate as of the dates indicated:

                                 
    At September 30,   At December 31,
    2004
   2003
   2002
   2001
            (Dollars in thousands)        
Interest Rate
                                
Less than 2%
   $ 50,247     $ 55,034     $ 39,945     $ 387  
2.00%-2.99%
     60,282       37,753       38,374       46,442  
3.00%-3.99%
     8,713       7,776       9,808       29,213  
4.00%-4.99%
     10,967       13,960       17,353       28,278  
5.00%-5.99%
     1,443       4,034       12,641       36,287  
6.00%-6.99%
     1,937       5,226       6,832       —  
 
    
 		      
 		      
 		      
 		  
Total
   $ 133,589     $ 123,783     $ 124,953     $ 140,607  
 
    
 		      
 		      
 		      
 		  

     The following table sets forth the amount and maturities of time deposits at September 30, 2004:

                                                 
                                         
    Year ending September 30,
   After
September 30,		    
    2005
   2006
   2007
   2008
   2008
   Total
            (Dollars in thousands)                
Interest Rate
                                                
Less than 2%
   $ 49,579     $ 668     $ —     $ —     $ —     $ 50,247  
2.00%-2.99%
     36,486       17,780       4,850       1,166       —       60,282  
3.00%-3.99%
     1,640       1,770       1,837       3,466       —       8,713  
4.00%-4.99%
     4,028       6,911       —       28       —       10,967  
5.00%-5.99%
     1,443       —       —       —       —       1,443  
6.00%-6.99%
     1,921       —       —       16       —       1,937  
 
    
 		      
 		      
 		      
 		      
 		      
 		  
Total
   $ 95,097     $ 27,129     $ 6,687     $ 4,676     $ —     $ 133,589  
 
    
 		      
 		      
 		      
 		      
 		      
 		  

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     As of September 30, 2004, the aggregate amount of outstanding certificates of deposit in amounts greater than or equal to $100,000 was approximately $38.7 million. The following table sets forth the maturity of those certificates as of September 30, 2004:

         
    At September 30. 2004
    (Dollars in thousands)
Three months or less
   $ 8,859  
Over three months through six months
     14,949  
Over six months through one year
     5,049  
Over one year to three years
     7,982  
Over three years
     1,858  
 
    
 		  
Total
   $ 38,697  
 
    
 		  

     Borrowings. Benjamin Franklin Bank utilizes advances from the Federal Home Loan Bank of Boston, primarily in connection with the funding of growth in its assets. Federal Home Loan Bank of Boston advances are secured primarily by certain of Benjamin Franklin Bank’s mortgage loans, certain investment securities and by Benjamin Franklin Bank’s holding of Federal Home Loan Bank of Boston stock. As of September 30, 2004, Benjamin Franklin Bank had outstanding $75.0 million in Federal Home Loan Bank of Boston advances, and had the ability to borrow up to a total of $154.6 million based on available collateral.

     The following table sets forth certain information concerning balances and interest rates on Benjamin Franklin Bank’s Federal Home Loan Bank of Boston advances at the dates and for the periods indicated:

                                         
    At or For the    
    Nine Months Ended   At or For the Years Ended
    September 30,
   December 31,
    2004
   2003
   2003
   2002
   2001
            (Dollars in thousands)        
Balance at end of period
   $ 75,000     $ 36,000     $ 36,000     $ 36,000     $ 36,000  
Average balance during period
   $ 44,421     $ 36,000     $ 36,000     $ 36,000     $ 35,242  
Maximum outstanding at any month end
   $ 75,000     $ 36,000     $ 36,000     $ 36,000     $ 36,150  
Weighted average interest rate at end of period
     3.21 %     4.47 %     4.47 %     4.47 %     4.47 %
Weighted average interest rate during period
     3.99 %     4.47 %     4.47 %     4.47 %     4.67 %

     In 2002, Benjamin Franklin Bancorp raised net proceeds of $8.7 million in a sale of $9.0 million of subordinated debentures to Benjamin Franklin Capital Trust I (the “Trust”). The Trust funded the purchase by participating in a pooled offering of 9,000 capital securities representing preferred ownership interests in the assets of the Trust with a liquidation value of $1,000 each. Interest payable on the subordinated debentures and cumulative dividends payable quarterly on the preferred securities is 6.94% for the first five years and thereafter will be at a rate equal to the three month LIBOR rate plus 3.45%. Benjamin Franklin Bancorp has the option to defer interest payments on the subordinated debentures for up to five years and, accordingly, the Trust may defer dividend distributions for up to five years. The debentures and the preferred securities mature in November 2032 unless Benjamin Franklin Bancorp elects and obtains regulatory approval to accelerate the maturity to November 2007 or thereafter.

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Properties

     Benjamin Franklin Bank conducts its business through its main office located in Franklin, Massachusetts and five other offices located southeast of the Boston metropolitan area. All of Benjamin Franklin Bank’s office facilities are owned by the Bank. The following table sets forth information about our offices as of September 30, 2004:

             
    Location
   Year Opened
Main Office:
   58 Main Street, Franklin, MA 02038     1935  
 
            
Branch Offices:
   231 East Central St., Franklin, MA 02038     1998  
 
   4 North Main St., Bellingham, MA 02019     1982  
 
   1 Mechanic St., Foxborough, MA 02035     1998  
 
   76 North Street, Medfield, MA 02052     1998  
 
   221 Main Street, Milford, MA 01757     1992  

Subsidiary Activities

     Benjamin Franklin Bancorp conducts its principal business activities through its wholly-owned subsidiary, Benjamin Franklin Bank. Subsidiaries of Benjamin Franklin Bancorp and Benjamin Franklin Bank are as follows:

     Benjamin Franklin Bank Capital Trust I, a Delaware Trust, is a wholly-owned subsidiary of Benjamin Franklin Bancorp. In 2002, Benjamin Franklin Bancorp raised net proceeds of $8.7 million in a sale of $9.0 million in junior subordinated notes due 2032 to Benjamin Franklin Capital Trust I (the “Trust”). The Trust funded the purchase by participating in a pooled offering of 9,000 capital securities representing preferred ownership interests in the assets of the Trust with a liquidation value of $1,000 each. The interest rate payable on the subordinated notes is 6.94% for the first five years and thereafter will be at a rate equal to the three month LIBOR rate plus 3.45%.

     Benjamin Franklin Bank Securities Corp., a Massachusetts corporation, is a wholly-owned subsidiary of Benjamin Franklin Bank. Benjamin Franklin Bank Securities Corp. (“BFBSC”) engages exclusively in buying, selling and holding investment securities on its own behalf and not as a broker. The income earned on BFBSC’s investment securities is subject to a significantly lower rate of state tax than that assessed on income earned on investment securities maintained at Benjamin Franklin Bank. At September 30, 2004, BFBSC had total assets of $73.7 million, consisting primarily of cash and investment securities.

Legal Proceedings

     Benjamin Franklin Bank is not involved in any legal proceedings other than routine legal proceedings occurring in the ordinary course of business. Management believes that those routine legal proceedings involve, in the aggregate, amounts that are immaterial to the financial condition and results of operations of Benjamin Franklin Bank.

Employees

     As of September 30, 2004, Benjamin Franklin Bank had 110 full-time and 21 part-time employees. Employees are not represented by a collective bargaining unit and Benjamin Franklin Bank considers its relationship with its employees to be good.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF BENJAMIN FRANKLIN BANCORP

     This section is intended to help potential investors understand the financial performance of Benjamin Franklin Bancorp and Benjamin Franklin Bank through a discussion of the factors affecting our financial condition at September 30, 2004, December 31, 2003 and December 31, 2002 and our consolidated results of operations for the nine months ended September 30, 2004 and 2003 and for the years ended December 31, 2003, 2002 and 2001. This section should be read in conjunction with the consolidated financial statements and notes to the consolidated financial statements that appear elsewhere in this prospectus. The financial condition and results of operations reported at September 30, 2004 and for the nine-month period ending September 30, 2004 are not necessarily indicative of the financial condition and results of operations that will result for the fiscal year ending December 31, 2004. In this section, we sometimes refer to Benjamin Franklin Bank and Benjamin Franklin Bancorp together as “Benjamin Franklin” since the financial condition and results of operation of Benjamin Franklin Bancorp closely reflect the financial condition and results of operation of its sole operating subsidiary, Benjamin Franklin Bank.

     Following the completion of the conversion, we anticipate that our non-interest expense will increase as a result of the increased costs associated with managing a public company, increased compensation expenses associated with the purchases of shares of common stock by our employee stock ownership plan, the costs of funding the Benjamin Franklin Bank Charitable Foundation and the adoption of a stock-based incentive plan, if approved by Benjamin Franklin Bancorp’s stockholders.

     Assuming that the adjusted maximum number of shares is sold in the offering (6,612,500 shares) and 400,000 shares are issued to the Benjamin Franklin Bank Charitable Foundation:

i.   the contribution to the Benjamin Franklin Bank Charitable Foundation will be approximately $4,000,000 million, all of which will be expensed in the quarter during which the conversion is completed;
 
ii.   the employee stock ownership plan will acquire 561,000 shares of common stock with a $5.6 million loan that is expected to be repaid over 30 years, resulting in an annual compensation expense (pre-tax) of approximately $187,000 (assuming that the common stock maintains a value of $10 per share);
 
iii.   the stock-based incentive plan would award a number of shares equal to 4.0% of the shares sold in the offering (including shares issued to the Benjamin Franklin Bank Charitable Foundation), or 280,500 shares to eligible participants, which would be expensed as the awards vest. Assuming that all shares are awarded under the stock-based incentive plan at a price of $10 per share, and that the awards vest over a five year period, the corresponding annual expense (pre-tax) associated with shares awarded under the stock-based incentive plan would be approximately $561,000.

     The actual expense that will be recorded for the employee stock ownership plan will be determined by the market value of the shares of common stock as they are released to employees over the term of the loan, and whether the loan is repaid faster than its contractual term. Accordingly, increases in the stock price above $10 per share will increase the total employee stock ownership plan expense, and any accelerated repayment of the loan will increase the annual employee stock ownership plan expense. Further, the actual expense of the stock awards granted under the stock-based incentive plan will be determined by the fair market value of the stock on the grant date, which might be greater than $10 per share.

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Overview

     Income. Benjamin Franklin Bancorp’s results of operations are dependent mainly on net interest income, which is the difference between the income earned on its loan and investment portfolios and interest expense incurred on its deposits and borrowed funds. Results of operations are also affected by fee income from banking and non-banking operations, provisions for loan losses, gains (losses) on sales of loans and securities available for sale, loan servicing income and other miscellaneous income.

     Expenses. Benjamin Franklin’s expenses consist primarily of compensation and employee benefits, office occupancy, technology, marketing, general administrative expenses and income tax expense.

     Results of operations are also significantly affected by general economic and competitive conditions, particularly with respect to changes in interest rates, government policies and actions of regulatory authorities. Future changes in applicable law, regulations or government policies may materially impact Benjamin Franklin’s financial condition and results of operations. See “Risk Factors” beginning on page [#].

Critical Accounting Policies

     Critical accounting policies are those that involve significant judgments and assessments by management, and which could potentially result in materially different results under different assumptions and conditions. Benjamin Franklin considers the following to be critical accounting policies:

     Allowance for Loan Losses. This accounting policy is considered critical due to the high degree of judgment involved, the subjectivity of the underlying assumptions used, and the potential for changes in the economic environment that could result in material changes in the amount of the allowance for loan losses considered necessary. The allowance is evaluated on a regular basis by management and is based on a periodic review of the collectibility of the loans in light of historical experience, the nature and size of the loan portfolio, adverse situations that may affect borrowers’ ability to repay, the estimated value of any underlying collateral and prevailing economic conditions. For a full discussion of the allowance for loan losses, please refer to “Business of Benjamin Franklin Bancorp—Asset Quality” on page [#].

     Income Taxes. Benjamin Franklin uses the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. A valuation allowance related to deferred tax assets is established when, in management’s judgment, it is more likely than not that all or a portion of such deferred tax assets will not be realized. Refer to Note 1 of the notes to the financial statements in this prospectus.

     Intangible Assets. Benjamin Franklin considers accounting for goodwill to be critical because significant judgment is exercised in performing periodic valuations of this asset. In accordance with generally accepted accounting principles, goodwill is regularly evaluated for impairment, which involves tracking and measuring the fair value of the business unit acquired. If impairment is detected, the carrying value of goodwill is reduced through a charge to earnings. The evaluation of goodwill involves estimations of discount rates and the timing of projected future cash flows, which are subject to change with changes in economic conditions and other factors. Such changes in the assumptions used to evaluate this intangible asset affect its value and could have a material adverse impact on Benjamin Franklin’s results of operations.

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     This discussion has highlighted those accounting policies that management considers to be critical, however all accounting policies are important, and therefore the reader is encouraged to review each of the policies included in Note 1 to the consolidated financial statements to gain a better understanding of how Benjamin Franklin’s financial performance is measured and reported.

Analysis of Net Interest Income

     Net interest income represents the difference between income on interest-earning assets and expense on interest-bearing liabilities. Net interest income also depends upon the relative amounts of interest-earning assets and interest-bearing liabilities and the interest rates earned or paid on them.

     The following tables set forth average balance sheets, average yields and costs, and certain other information for the periods indicated. All average balances are daily average balances. Non-accrual loans were included in the computation of average balances, but have been reflected in the table as loans carrying a zero yield. The yields set forth below include the effect of deferred fees, discounts and premiums that are amortized or accreted to interest income or expense.

                                                                 
                    Nine Months Ended September 30,
    At September 30, 2004
   2004
   2003
            Weighted                                    
            Average   Average                   Average            
            Yield/   Outstanding           Yield/   Outstanding           Yield/
    Balance
   Rate
   Balance
   Interest
   Rate(1)
   Balance
   Interest
   Rate(1)
    (Dollars in thousands)
Interest-earning assets:
                                                                
Loans
   $ 375,516       5.00 %   $ 324,944     $ 12,567       5.17 %   $ 265,369     $ 11,601       5.84 %
Investment securities
     101,551       3.77 %     109,898       2,549       3.10 %     121,402       2,413       2.66 %
Interest-earning deposits
     6,831       1.71 %     15,382       107       0.93 %     41,565       515       1.66 %
 
    
 		              
 		      
 		              
 		      
 		          
Total interest-earning assets
     483,898       4.70 %     450,224       15,223       4.52 %     428,336       14,529       4.54 %
Non-interest-earning assets
     34,033               33,760                       37,560                  
 
    
 		              
 		                      
 		                  
Total assets
   $ 517,931             $ 483,984                     $ 465,896                  
 
    
 		              
 		                      
 		                  
Interest-bearing liabilities:
                                                                
Savings deposits
   $ 99,799       0.50 %   $ 99,172       368       0.50 %   $ 92,652       345       0.50 %
Money market
     54,391       1.14 %     51,779       332       0.86 %     47,836       290       0.81 %
NOW accounts
     25,179       0.14 %     23,955       27       0.15 %     73,403       82       0.15 %
Certificates of deposits
     133,589       2.35 %     133,492       2,494       2.50 %     127,370       2,723       2.86 %
 
    
 		              
 		      
 		              
 		      
 		          
Total deposits
     312,958       1.37 %     308,398       3,221       1.40 %     341,261       3,440       1.35 %
Short term borrowings
     29,000       1.68 %     6,195       56       1.21 %     —       —       0.00 %
Long-term debt
     55,000       4.72 %     47,226       1,747       4.94 %     45,000       1,694       5.03 %
 
    
 		              
 		      
 		              
 		      
 		          
Total interest-bearing liabilities
     396,958       1.86 %     361,819       5,024       1.85 %     386,261       5,134       1.78 %
Non-interest bearing liabilities
     90,387               92,207                       49,501                  
 
    
 		              
 		                      
 		                  
Total liabilities
     487,345               454,026                       435,762                  
Equity
     30,586               29,958                       30,134                  
 
    
 		              
 		                      
 		                  
Total liabilities and equity
   $ 517,931             $ 483,984                     $ 465,896                  
 
    
 		              
 		                      
 		                  
Net interest income
                           $ 10,199                     $ 9,395          
 
                            
 		                      
 		          
Net interest rate spread (2)(5)
             2.84 %                     2.67 %                     2.76 %
Net interest-earning assets (3)
   $ 86,940             $ 88,405                     $ 42,075                  
 
                    
 		                      
 		                  
Net interest margin (4)
             N/A                       3.03 %                     2.93 %
Average interest-earning assets to interest-bearing liabilities
                                     124.43 %                     110.89 %

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    Years Ended December 31,
    2003
   2002
   2001
    Average                   Average                   Average            
    Outstanding           Yield/   Outstanding           Yield/   Outstanding           Yield/
    Balance
   Interest
   Rate
   Balance
   Interest
   Rate
   Balance
   Interest
   Rate
    (Dollar in thousands)
Interest-earning assets:
                                                                        
Loans
   $ 270,342     $ 15,530       5.74 %   $ 249,260     $ 16,322       6.55 %   $ 274,088     $ 20,355       7.43 %
Investment securities
     122,570       3,450       2.81 %     89,295       4,166       4.67 %     73,069       4,267       5.84 %
Interest-earning deposits
     35,293       552       1.56 %     58,980       918       1.56 %     53,084       1,819       3.43 %
 
    
 		      
 		              
 		      
 		              
 		      
 		          
Total interest-earning assets
     428,205       19,532       4.56 %     397,535       21,406       5.38 %     400,241       26,441       6.61 %
Non-interest-earning assets
     37,495                       41,978                       37,154                  
 
    
 		                      
 		                      
 		                  
Total assets
   $ 465,700                     $ 439,513                     $ 437,395                  
 
    
 		                      
 		                      
 		                  
Interest-bearing liabilities:.
                                                                        
Savings deposits
   $ 93,501       465       0.50 %   $ 83,878       567       0.68 %   $ 71,651       921       1.29 %
Money market
     48,256       392       0.81 %     45,648       617       1.35 %     37,919       849       2.24 %
NOW accounts
     60,751       92       0.15 %     69,832       221       0.32 %     61,957       360       0.58 %
Certificates of deposits
     126,856       3,538       2.79 %     131,073       4,451       3.40 %     167,566       8,622       5.15 %
 
    
 		      
 		              
 		      
 		              
 		      
 		          
Total deposits
     329,364       4,487       1.36 %     330,431       5,856       1.77 %     339,093       10,752       3.17 %
Short-term borrowings
     0       0       0.00 %     0       0       0.00 %     0       0       0.00 %
Long-term debt
     45,001       2,265       5.03 %     37,504       1,738       4.63 %     35,242       1,645       4.67 %
 
    
 		      
 		              
 		      
 		              
 		      
 		          
Total interest-bearing liabilities
     374,365       6,752       1.80 %     367,935       7,594       2.06 %     374,335       12,397       3.31 %
Non-interest bearing liabilities
     61,454                       43,041                       37,612                  
 
    
 		                      
 		                      
 		                  
Total liabilities
     435,819                       410,976                       411,947                  
Equity
     29,881                       28,537                       25,448                  
 
    
 		                      
 		                      
 		                  
Total liabilities and equity.
   $ 465,700                     $ 439,513                     $ 437,395                  
 
    
 		                      
 		                      
 		                  
Net interest income
           $ 12,780                     $ 13,812                     $ 14,044          
 
            
 		                      
 		                      
 		          
Net interest rate spread (5)
                     2.76 %                     3.32 %                     3.30 %
Net interest-earning assets (3)
   $ 53,840                     $ 29,600                     $ 25,906                  
 
    
 		                      
 		                      
 		                  
Net interest margin (4)
                     2.98 %                     3.47 %                     3.51 %
Average interest-earning assets to interest-bearing liabilities
                     114.38 %                     108.04 %                     106.92 %

(1)   Yields and rates for the nine months ended September 30, 2004 and 2003 are annualized.
 
(2)   Net interest rate spread represents the difference between the yield on interest-earning assets and the cost of interest-bearing liabilities at September 30, 2004.
 
(3)   Net interest-earning assets represents total interest-earning assets less total interest-bearing liabilities.
 
(4)   Net interest margin represents net interest income divided by average total interest-earning assets.
 
(5)   Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities for the nine months ended September 30, 2004 and 2003 and years ended December 31, 2003, 2002 and 2001.

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     The following table presents the dollar amount of changes in interest income and interest expense for the major categories of Benjamin Franklin’s interest-earning assets and interest-bearing liabilities. Information is provided for each category of interest-earning assets and interest-bearing liabilities with respect to (i) changes attributable to changes in volume (i.e., changes in average balances multiplied by the prior-period average rate) and (ii) changes attributable to rate (i.e., changes in average rate multiplied by prior-period average balances). For purposes of this table, changes attributable to both rate and volume, which cannot be segregated, have been allocated proportionately to the change due to volume and the change due to rate.

                                                                         
    Nine Months Ended        
    September 30,   Years Ended December 31,   Years Ended December 31,
    2004 vs. 2003
   2003 vs. 2002
   2002 vs. 2001
    Increase (Decrease)           Increase (Decrease)           Increase (Decrease)    
    Due to
   Total   Due to
   Total   Due to
   Total
                    Increase                   Increase                   Increase
    Volume
   Rate
   (Decrease)
   Volume
   Rate
   (Decrease)
   Volume
   Rate
   (Decrease)
    (Dollars in thousands)
Interest-earning assets:
                                                                        
Loans
   $ 2,604     $ (1,638 )   $ 966     $ 1,381     $ (2,174 )   $ (793 )   $ (1,844 )   $ (2,189 )   $ (4,033 )
Investment securities
     (229 )     364       135       1,552       (2,269 )     (717 )     948       (1,049 )     (101 )
Interest-earning deposits
     (324 )     (84 )     (408 )     (369 )     2       (367 )     202       (1,102 )     (900 )
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		  
Total interest-earning assets
     2,051       (1,358 )     693       2,564       (4,441 )     (1,877 )     (694 )     (4,340 )     (5,034 )
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		  
Interest-bearing liabilities:
                                                                        
Savings deposits
     24       —       24       65       (167 )     (102 )     157       (511 )     (354 )
Money market s
     24       19       43       35       (260 )     (225 )     173       (406 )     (233 )
NOW accounts
     (55 )     —       (55 )     (29 )     (103 )     (132 )     46       (182 )     (136 )
Certificates of deposits
     131       (361 )     (230 )     (143 )     (770 )     (913 )     (1,878 )     (2,294 )     (4,172 )
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		  
Total deposits
     124       (342 )     (218 )     (72 )     (1,300 )     (1,372 )     (1,502 )     (3,393 )     (4,895 )
Short-term borrowings and long-term debt
     84       23       107       347       180       527       106       (13 )     93  
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		  
Total interest-bearing liabilities
     208       (319 )     (111 )     275       (1,120 )     (845 )     (1,396 )     (3,406 )     (4,802 )
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		  
Change in net interest income
   $ 1,843     $ (1,039 )   $ 804     $ 2,289     $ (3,321 )   $ (1,032 )   $ 702     $ (934 )   $ (232 )
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		      
 		  

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Comparison of Financial Condition At September 30, 2004 and December 31, 2003

     Total Assets. Total assets increased by $59.1 million, or 12.9%, from $458.8 million at December 31, 2003 to $517.9 million at September 30, 2004. This increase was largely the result of an increase in the loan portfolio, offset by reductions in cash and short-term investments.

     Cash and Short-term Investments. Cash and correspondent bank balances decreased by $6.2 million to $8.3 million as of September 30, 2004 when compared to December 31, 2003. Over the same 9-month period, short-term investments, comprised of overnight fed funds sold and money market funds, decreased $14.1 million to $6.8 million at September 30, 2004. These reductions in short-term liquidity served primarily to fund increases in the Bank’s loan portfolio.

     Securities. The investment portfolio aggregated $94.7 million at September 30, 2004, a decrease of $8.3 million, or 8.1%, from $103.0 million at December 31, 2003. This reduction, caused by net paydowns in mortgage-backed securities totaling $20.5 million offset by increases in holdings of U.S. Agency securities and corporate bonds totaling $7.1 million and $5.1 million, respectively, was used to fund growth in the Bank’s loan portfolio.

     Net Loans. Net loans as of September 30, 2004 were $375.5 million, an increase of $86.7 million, or 30.0%, over net loan balances of $288.9 million as of December 31, 2003. Loan growth occurred in most product categories, including residential mortgage loans ($72.2 million), commercial real estate ($10.5 million), construction ($1.1 million), and home equity/consumer ($3.4 million). The significant growth in residential mortgage loans can be attributed to the attractive rates offered on adjustable-rate mortgages and 15-year bi-weekly mortgage loans.

     Deposits. Deposits increased by $19.3 million to $399.6 million at September 20, 2004, an increase of 5.1% over balances of $380.3 million at December 31, 2003. The largest increases came in certificates of deposit ($9.8 million), money market accounts ($4.3 million) and savings accounts ($3.7 million). The deposit increases overall were the result Ben Franklin’s continued marketing and promotional efforts in its market area, including efforts to remain competitive in all of its deposit product offerings.

     Borrowed Funds. Funds borrowed from the Federal Home Loan Bank of Boston increased by $39.0 million to $75.0 million at September 30, 2004, a 108.3% increase over balances of $36.0 million as of December 31, 2003. These additional funds were borrowed in order to fund the continued growth in the Bank’s loan portfolio during the nine months ended September 30, 2004. The $9.0 million balance in subordinated debt remained unchanged from December 31, 2003 to September 30, 2004.

     Retained Earnings. Retained earnings increased by $1.3 million to $30.6 million at September 30, 2004, an increase of 4.4% from a balance of $29.3 million as of December 31, 2003. This change was the result of net income for the first nine months of $1,312,000, offset by a small increase ($27,000) in the net unrealized loss on marketable securities.

Comparison of Operating Results For The Nine Months Ended September 30, 2004 and September 30, 2003

     Net Income. Net income for the nine months ended September 30, 2004 was $1,312,000, a decrease of 5.0% when compared to net income of $1,381,000 for the first nine months of 2003. An $897,000 decline in other income and a $170,000 increase in the provision for loan losses were almost entirely offset by an increase in net interest income of $804,000 and a $169,000 reduction in operating expenses.

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     Net Interest Income. The tables on pages [#] and [#] set forth the components of Benjamin Franklin’s net interest income, yields on interest earning assets and interest bearing liabilities, and the effect on net interest income arising from changes in volume and rate.

     Benjamin Franklin earned net interest income of $10.2 million and $9.4 million in the first nine months of 2004 and 2003, respectively. The increase between the two periods of $804,000, or 8.6%, is due to a 10 basis point, or 3.4%, increase in the net interest margin coupled with a $21.9 million, or 5.1%, increase in average interest-earning assets. Though average yields and rates declined generally from the nine months ended September 30, 2003 to the same period in 2004, the 10 basis point increase in the net interest margin from 2003 to 2004 was achieved primarily through a change in mix in both earning assets and in funding liabilities. Within earnings assets, higher-yielding loans increased by $59.6 million between periods, while lower-yielding investment securities and short-term investments declined by $37.7 million on average. Within Benjamin Franklin’s funding liabilities, the mix shifted somewhat in favor of non-interest bearing accounts, which increased by $42.7 million on average. This shift was caused by a change made in the Bank’s primary checking account product in September 2003, whereby the payment of interest was eliminated.

      Interest Income. Interest income rose $694,000, or 4.8%, to $15.2 million for the nine months ended September 30, 2004 from $14.5 million for the nine months ended September 30, 2003. The increase was caused primarily by a $21.9 million increase in interest-earning assets, which had the effect of increasing interest income by $2.0 million. Loans increased on average by $59.6 million between the two periods, offset by decreases in the average balances of investment securities ($11.5 million) and short-term investments ($26.2 million). Despite the fact that the average yield on loans declined from 5.84% for the nine months ended September 30, 2003 to 5.17% for the same period in 2004, the overall yield on interest earning assets remained almost unchanged at 4.52% and 4.54% for the 2003 and 2004 periods, respectively, due to the change in the mix of interest earning assets.

      Interest Expense. Interest expense for the nine months ended September 30, 2004 declined, by $110,000 or 2.1%, to $5.0 million as compared to interest expense of $5.1 million for the nine months ended September 30, 2003. The effect of an increase in non-interest-bearing liabilities, which grew by an average of $42.7 million in the 2004 period, was offset partially by a 7 basis point, or 3.9%, increase in the average rates paid on interest-bearing liabilities. The increase in non-interest-bearing liabilities was due to a change made in the Bank’s primary checking account product, whereby the payment of interest was eliminated.

     Provision for Loan Losses. Benjamin Franklin records a provision for loan losses as a charge to its earnings when necessary in order to maintain the allowance for loan losses at a level sufficient to absorb potential losses inherent in the loan portfolio. Refer to “Business of Benjamin Franklin Bancorp—Asset Quality” on page [#] for additional information about Benjamin Franklin’s methodology for establishing its allowance for loan losses. Benjamin Franklin recorded $470,000 and $300,000 in loan loss provisions during the nine months ended September 30, 2004 and 2003, respectively. Provisions in both years were reflective of growth in the loan portfolio and the realization of net recoveries of $24,000 and $38,000 in the nine months ended September 30, 2004 and 2003, respectively. At September 30, 2004, the allowance for loan losses totaled $3.0 million, or 0.80% of the loan portfolio, compared to $2.7 million, or 0.95%, of total loans at September 30, 2003.

     Non-interest Income. Non-interest income for the nine month period ended September 30, 2004 declined to $1.7 million, a reduction of $0.9 million, or 35.0%, when compared to non-interest income of $2.6 million earned during the nine month period ended September 30, 2003. An $845,000 decline in gains on loan sales, a $122,000 reduction in loan servicing fees and a $105,000 decrease in gains on sales of securities were partially offset by a $52,000 increase in deposit service fees and an additional $123,000

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in miscellaneous income. The largest area of decline, on loan sales, was attributable to the rise in market interest rates in 2004, which in turn caused a decline in the origination of fixed rate residential mortgage loans that the Bank typically sells at a small gain in the secondary market. Loan servicing fee income was also negatively affected by the reduction in fixed rate loan originations sold with servicing rights retained. The increase in miscellaneous income in the 2004 period was primarily attributable to an increase in fees earned on investment product sales, brought about by the addition of a second sales representative in the fourth quarter of 2003.

     Non-interest Expense. Non-interest expense declined, by $169,000 or 1.8%, to $9.5 million for the nine months ended September 30, 2004, compared to $9.6 million for the nine months ended September 30, 2003. Reductions in occupancy and equipment costs, and professional fees were offset in part by an increase in salaries and employee benefits.

     Salaries and employee benefits expenses increased $673,000, or 13.4%, to $5.7 million for the nine months ended September 30, 2004. The increase was primarily due to normal merit increases averaging 4.5%, the addition of one senior officer position, and significantly lower deferral of loan origination costs due to a lower volume of loan originations in the 2004 period when compared to 2003. Occupancy and equipment expenses declined $285,000, or 21.6%, to $1.0 million for the nine months ended September 30, 2004. Most of this reduction was attributable to a decline in depreciation expense associated with branch-related capital expenditures made five years earlier. Professional fees decreased $629,000, or 76.6%, to $192,000 for the nine months ended September 30, 2004, due primarily to a decline in legal costs and loan origination expenses.

     Income Taxes. Income tax expense was $626,000 for the nine months ended September 30, 2004, a decrease of $25,000, or 3.8%, compared to $651,000 for the nine months ended September 30, 2003. The effective tax rate remained essentially unchanged between years, at 32.3% and 32.0% in 2004 and 2003, respectively.

Comparison of Financial Condition At December 31, 2003 and December 31, 2002

     Total Assets. Total assets increased by $6.6 million, or 1.5%, from $452.2 million at December 31, 2002 to $458.8 million at December 31, 2003. This increase was largely the result of an increase in the loan portfolio, offset by a reduction in investment securities.

     Cash and Short-term Investments. While cash and correspondent bank balances remained essentially the same from year to year, short-term investments consisting of overnight fed funds sold and money market funds declined by $16.9 million to $21.0 million at September 30, 2003. This reduction in short-term liquidity served primarily to fund an increase in the loan portfolio.

     Securities. The investment portfolio aggregated $103.0 million at December 31, 2003, a decline of $6.5 million, or 5.9%, from $109.5 million at December 31, 2002. Within the securities portfolio, decreases in U.S. Treasury and Agency securities ($37.2 million) and other bonds and obligations ($14.5 million), offset by a $45.3 million increase in holdings of mortgage-backed securities, were used to fund increases in the Bank’s loan portfolio. The change in the securities portfolio mix is due to the more favorable yields available on mortgage-backed securities of like duration.

     Net Loans. Net loans as of December 31, 2003 were $288.9 million, an increase of $26.9 million, or 10.3%, over net loan balances of $261.9 million as of December 31, 2002. Most loan product categories increased during this period, including residential ($7.1 million), commercial real estate ($17.3 million), construction ($2.9 million), and consumer ($0.7 million). In 2003, Benjamin Franklin had its highest level of new loan activity to date, with total originations of $246.9 million, the product of its

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ability to offer competitive, attractive interest rates resulting from a historically low interest rate environment. Of that amount, $96.3 million of fixed rate loan originations were sold in the secondary market, with servicing rights retained. The low interest rate environment also brought significant refinancing activity, which resulted in total loan repayments and prepayments of $149.6 million during 2003.

     Deposits and Borrowed Funds. Deposits increased slightly, by 1.9% or $7.0 million, to $380.2 million at December 31, 2003 from $373.3 million at December 31, 2002. A modest shift in the mix of deposits occurred with increases in savings accounts ($8.6 million) and money market accounts ($5.9 million), offset by net reductions in demand deposits and NOW accounts ($6.4 million) and certificates of deposit ($1.2 million). Funds borrowed from the Federal Home Loan Bank of Boston remained unchanged from December 31, 2002 to December 31, 2003, at $36 million. The balance of subordinated debt also remained unchanged year over year, at $9.0 million.

     Retained Earnings. Retained earnings declined by $0.5 million to $29.3 million at December 31, 2003, a decrease of 1.7% from a balance of $29.8 million as of December 31, 2002. This change was the result of net income for the year of $1.7 million, offset by an increase in the net unrealized loss on marketable securities of $2.2 million.

Comparison of Operating Results For The Years Ended December 31, 2003 and December 31, 2002

     Net Income. Net income declined $1.0 million, or 37.4%, to $1.7 million for the year ended December 31, 2003 compared to $2.7 million for the year ended December 31, 2002. The decrease was primarily the result of a reduction in net interest income, an increase in operating expenses, an increase in income taxes, offset in part by an increase in other income and a reduction in the provision for loan losses.

     Net Interest Income. The tables on pages [#] and [#] set forth the components of Benjamin Franklin’s net interest income, yields on interest earning assets and interest bearing liabilities, and the effect on net interest income arising from changes in volume and rate.

     Benjamin Franklin earned net interest income of $12.8 million and $13.8 million in the years ended December 31, 2003 and 2002, respectively. The decline between the two periods of $1.0 million, or 7.5%, was caused by a 49 basis point, or 14.1%, reduction in the net interest margin, which had the effect of reducing net interest income by $3.3 million. This was offset in part by an increase in the volume of interest-earning assets, which grew by $30.7 million, or 7.7%, in 2003 as compared to 2002, which served to increase net interest income by $2.3 million.

     Interest Income. Interest income declined $1.9 million, or 8.8%, to $19.5 million for 2003 from $21.4 million for the prior year. The decrease was due to lower average yields on loans and investment securities, which was offset in part by higher average balances in both asset classes. In 2003 as compared to 2002, the yield earned on loans declined by 81 basis points, or 12.4%, to 5.74%, a change that reflected the drop in market interest rates generally in 2003. Offsetting this to some degree was an increase in loans outstanding, which grew by $21.1 million, or 8.5%. Consistent with the lower interest rate environment in 2003, yields on investments securities also dropped significantly when compared to 2002, falling by 186 basis points to 2.81% for the 2003 year. A $9.6 million net increase in the average balances of investment securities and short-term investments in 2003 partially offset the decline in yields.

     Interest Expense. Interest expense declined $842,000, or 11.1%, to $6.8 million for the year ended December 31, 2003 from $7.6 million in the prior year. The primary cause was a reduction in the rates paid on interest-bearing deposit accounts, which declined by 41 basis points, or 23.2%, to 1.36% for

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2003 from 1.77% for 2002. The drop in deposit rates reflected the lower interest rate environment generally in 2003 as compared to 2002. The average balances of deposits and short-term Federal Home Loan Bank of Boston borrowings were virtually unchanged from year to year, while the average balance of long-term debt including subordinated debt increased by $7.5 million to an average of $45.0 million for 2003 from $37.5 million for 2002. The effect of the increase in this item, which paid rates equivalent to 5.03% and 4.63% for 2003 and 2002, respectively, was to increase interest expense by $527,000.

     Provision for Loan Losses. Benjamin Franklin’s provision for loan losses decreased by $787,000, or 55.7%, to $625,000 in 2003 from $1.4 million in 2002. Contributing to the higher level of provision in 2002 was the creation of a specific reserve in the amount of $250,000 for a non-performing loan with an outstanding balance of $462,000 at December 31, 2002. This loan was charged-off it its entirety in 2003. Further, in 2002 management decided to increase general reserve levels for the portfolio as a whole after a thorough reevaluation of the Bank’s methodology for establishing the allowance for loan losses. This analysis considered economic conditions, peer comparisons and management’s estimate of losses inherent in the portfolio, and resulted in increases in general reserves for commercial real estate, commercial business and home equity loans. Also affecting the provisions for 2003 and 2002 were net charge-offs aggregating $414,000 and $277,000, respectively. The allowance for loan losses of $2.5 million at December 31, 2003 represented 0.87% of total loans, essentially unchanged when compared to 0.88% at December 31, 2002.

     Non-interest Income. Total non-interest income was $3.1 million in 2003, an increase of $222,000, or 7.8% from $2.9 million for 2002. The increase was primarily the result of a $904,000 rise in gains realized on sales of fixed rate residential mortgage loans sold in the secondary market and the fact that a $741,000 loss realized on the curtailment of the Bank’s pension plan was recognized in 2002, offset in part by a $1.5 million reduction in net gains realized on sales of investment securities. Also contributing to the change between years were a $189,000 decline in loan servicing fees and an increase of $180,000 in other income. The decrease in loan servicing fees was primarily the result of accelerated amortization of mortgage servicing rights due to accelerated principal payments caused by a reduction in market interest rates. The increase in other income was primarily caused by a $50,000 increase in fees earned on investment product sales due to the addition of a second sales representative during 2003 and a $125,000 increase in income from $1.3 million of BOLI contracts Benjamin Franklin purchased in the second half of 2003.

     Non-interest Expense. Non-interest expense increased $609,000, or 5.0%, to $12.7 million in 2003 as compared to $12.1 million in 2002. The largest increases occurred in salaries and benefits and professional fees, offset partially by a reduction in other general and administrative expenses. Salaries and employee benefits expenses increased $518,000, or 8.4%, to $6.7 million for the year ended December 31, 2003. Normal merit increases averaging 4.8% accounted for over half of this difference, supplemented by increases in retirement costs, medical insurance costs and an increase in the incentive bonus plan. Professional fees increased $262,000 or 36.2%, to $985,000 for 2003. This increase was caused primarily by increases in legal fees and loan origination costs. Other general and administrative expenses fell $223,000, or 10.8%, to $1.8 million for the year ended December 31, 2003. Contributing to this decline were reductions in fees paid to Board members, the result of fewer meetings in 2003 than 2002, and a drop in supplies expense as the Bank negotiated more favorable terms with its primary supplies vendor.

     Income Taxes. Income tax expense was $819,000 for the year ended December 31, 2003 an increase of $376,000, or 84.9%, compared to $443,000 for the year ended December 31, 2002. The effective tax rate was 32.7% in 2003 compared to 14.1% in 2002. The effective tax rate was unusually low in 2002 due to a $524,000 reduction in the deferred tax asset valuation allowance, a reduction made possible by the capital gain income realized on the sale of investment securities during the year.

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Comparison of Operating Results For The Years Ended December 31, 2002 and December 31, 2001

     Net Income. Net income rose to $2.7 million in 2002 from $41,000 in 2001. The primary reasons for the increase in income were a $4.1 million net change between years in the gain/loss realized on sale of securities and a significant reduction in the effective tax rate in 2002 when compared to 2001.

     Net Interest Income. The tables on pages [#] and [#] set forth the components of Benjamin Franklin’s net interest income, yields on interest earning assets and interest bearing liabilities, and the effect on net interest income arising from changes in volume and rate.

     Benjamin Franklin earned net interest income of $13.8 million and $14.0 million in the years ended December 31, 2002 and 2001, respectively. The decline between the two periods of $232,000, or 1.7%, resulted from a 4 basis point, or 1.1%, reduction in the net interest margin, and a $2.7 million, or 0.7%, drop in interest-earning assets.

     Interest Income. Interest income fell by $5.0 million, or 19.0%, to $21.4 million for 2003 from $26.4 million for the prior year. The decline was caused primarily by 1.23% reduction in the yield on interest-earning assets, which averaged 5.38% for 2002 as compared to 6.61% for 2001. All interest-earning asset categories experienced declines in yield between the two years, with loans declining 88 basis points to 6.55%, investment securities declining 117 basis points to 4.67% and short-term investments declining by 187 basis points to 1.56%. All yield declines were consistent with an interest rate environment that was lower generally in 2002 than in 2001. Though earning asset average balances declined by only $2.7 million in the aggregate, average loans outstanding fell by $24.8 million to an average of $249.3 million from $274.1 million in 2001, as a consequence of heavy refinancing activity in late 2001 and 2002. The Company’s liquidity position increased as a result, with increases in average balances of investment securities and short-term investments aggregating $16.2 million and $5.9 million, respectively. The net effect of these changes in earning asset volumes was to reduce interest income by $694,000 year over year. The $4.3 million remaining reduction in interest income from 2001 to 2002 was the result of the decline in earning-asset yields.

     Interest Expense. Interest expense declined $4.8 million, or 38.7%, to $7.6 million for the year ended December 31, 2002 from $12.4 million in the prior year. A 125 basis point, or 37.8%, decline in the average rate paid on interest-bearing liabilities, from 3.31% in 2001 to 2.06% in 2002 was responsible for $3.4 million of the reduction in interest expense. The remaining decline of $1.4 million was caused by a shift in the mix of deposits as well as by an overall reduction in deposit balances of $8.7 million or 2.6%. In response to the low interest rate environment existing in 2002, customers shifted funds out of term certificates into money market, savings and transaction accounts. The average volume of certificates of deposit declined by $36.5 million, or 21.8%, to an average of $131.1 million outstanding in 2002 from $167.6 million in 2001. Average balances of savings, money market and interest-bearing checking increased in the aggregate by $27.8 million from 2001 to 2002.

     Provision for Loan Losses. Benjamin Franklin’s provision for loan losses increased to $1.4 million for 2002 from $51,000 in 2001. The higher level of provision in 2002 was attributable in part to the creation of a specific reserve in the amount of $250,000 for a $462,000 non-performing loan classified “doubtful” and to a decision by management to increase general reserve levels for the portfolio as a whole. This decision was based on a review of economic conditions, peer comparisons and management’s estimate of losses inherent in the portfolio. As a result of this analysis, general reserves for commercial real estate, commercial construction, commercial business and home equity loans were increased significantly, by 100.0% to 167.0% of previous levels. For further discussion of the Benjamin Franklin’s current methodology, please refer to “Business of Benjamin Franklin Bancorp—Asset Quality” on page [#]. The provision in 2002 also included an amount sufficient to replenish the allowance for the effect of

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net charge-offs aggregating $277,000. In 2001, net recoveries of $58,000 were reflected in determining the provision for the year. The allowance for loan losses of $2.3 million at December 31, 2002 represented 0.88% of total loans, as compared to 0.46% at December 31, 2001.

     Non-interest Income. Total non-interest income was $2.9 million in 2002 as compared to net other charges aggregating $777,000 for the 2001 year. The swing between years was caused primarily by a $4.1 million change in gains/losses on sales of securities. In 2001, the Bank realized a net loss on securities sales of $2.5 million, while in 2002, net gains of $1.6 million were recorded. Offsetting this somewhat in 2002 was a $741,000 loss incurred on the curtailment of the Bank’s pension plan. Loan servicing fees also increased significantly in 2002, to $525,000 from $86,000 in 2001 as a result of an increase in fixed rate residential loans serviced.

     Non-interest Expense. Non-interest expense increased $550,000, or 4.8%, to $12.1 million in 2002 as compared to $11.6 million in 2001. Most of this increase occurred in salaries and benefits, which increased $529,000, or 9.4%, to $6.2 million for the year ended December 31, 2002. This increase was due to normal merit increases averaging 4.3% and costs associated with transitioning to a new CEO during 2002.

     Income Taxes. Income tax expense was $443,000 for the year ended December 31, 2002, a reduction of $1,167,000, or 72.5%, when compared to $1.6 million for the year ended December 31, 2001. The effective tax rate fell to 14.1% in 2002 as compared to 97.5% in 2001. The effective tax rate was unusually low in 2002 and unusually high in 2001 due to changes in the Bank’s deferred tax asset valuation allowance. In 2002, the valuation allowance was reduced by $524,000, a reduction allowed for by the capital gain income realized on the sale of investment securities during the year. In 2001, the valuation allowance increased by $1.0 million due to the fact that the capital losses on sales of securities realized during the year were not deductible for tax purposes.

Losses and Regulatory Action Arising from Equity Investments in 1999 and 2000

     Benjamin Franklin Bank entered into a Memorandum of Understanding (MOU) in June 2001 in response to regulatory concerns over equity investments made by the Bank under prior management in 1999 and 2000. The MOU was lifted in October 2002.

     In February 2001, the FDIC informed the Bank that both the size and concentration of its equity securities portfolio exceeded regulatory limits. The FDIC found that the $36 million equity securities portfolio at March 31, 2000 represented 154.0% of the Bank’s Tier 1 capital, and that technology stocks comprised approximately 50.0% of the total. The FDIC ordered Benjamin Franklin Bank to immediately cease equity investment activities and to liquidate the remaining equity securities in its portfolio. In March 2001, Benjamin Franklin Bank sold a substantial portion of its equity portfolio, resulting in an aggregate loss of $15.2 million. On this basis, Benjamin Franklin Bancorp determined that an other-than-temporary impairment existed with regard to certain equity securities in its portfolio as of December 31, 2000, and recorded an impairment charge of $11.4 million in the year ended December 31, 2000. After giving effect to the impairment charge and the net losses recognized upon the liquidation of the equity securities portfolio, partially offset by net gains on sales of other investment securities, Benjamin Franklin Bancorp reported a net loss of $4.7 million for the year ended December 31, 2000, and net income of only $41,000 for the year ended December 31, 2001.

     In June 2001, the Board of Directors of Benjamin Franklin Bank entered into an MOU with the FDIC and the Massachusetts Commissioner of Banks. The significant provisions of the MOU required the Board to evaluate its management team using an independent consultant, to prepare a management and staffing plan, and to retain qualified management consistent with such plan. The MOU also

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prohibited the Bank from purchasing any equity security without regulatory approval, called for a profit plan and revisions to the Bank’s liquidity and funds management policy, and required an increase in Tier 1 capital to at least 7.0%.

     In February 2002, the Bank’s former president retired, and the Board hired Thomas R. Venables as President and CEO. In October 2002, the FDIC and the Commissioner lifted the MOU in recognition of the substantial progress the Bank had made in satisfying its terms, and the Board of Directors adopted a Board Resolution addressing the matters remaining to be resolved. In July 2003, the Bank’s former Executive Vice President and Treasurer resigned. In August 2003, the FDIC and the Commissioner allowed the Board to rescind the Board Resolution, as all of the terms of the Resolution and the previous MOU had been satisfied.

Quantitative And Qualitative Disclosures About Risk Management

     Management and the Board of Benjamin Franklin recognize that taking and managing risk is fundamental to the business of banking. Through the development, implementation and monitoring of its policies with respect to risk management, the Bank strives to measure, evaluate and control the risks it faces. The Board and management understand that an effective risk management system is critical to the safety and soundness of the Bank. Chief among the risks faced by Benjamin Franklin are credit risk, market risk including interest rate risk, liquidity risk, operational (transaction) risk and compliance risk.

     Within management, the responsibility for risk management rests with the Risk Management Committee, chaired by the Compliance and Risk Management Officer. Other members of the Committee include the Chief Executive Officer, Chief Financial Officer, Treasurer, Chief Information Officer, and the senior officers responsible for lending, retail banking and human resources. The Risk Management Committee meets on a monthly basis to review the status of the Company’s risk management efforts, including reviews of internal and external audit findings, loan review findings, and the activities of the Asset/Liability Committee with respect to monitoring interest rate and liquidity risk. The Committee tracks any open items requiring corrective action with the goal of ensuring that each is addressed on a timely basis. The Compliance and Risk Management Officer reports all findings of the Risk Management Committee directly to the Board’s Audit and Risk Management Committee.

     Management of Credit Risk. Benjamin Franklin considers credit risk to be the most significant risk it faces, in that it has the greatest potential to affect the financial condition and operating results of the Bank. Credit risk is managed through a combination of policies established by the Board, the monitoring of compliance with these policies, and the periodic evaluation of loans in the portfolio, including those with problem characteristics. In general, Benjamin Franklin’s policies establish maximums on the amount of credit that may be granted to a single borrower (including affiliates), the aggregate amount of loans outstanding by type in relation to total assets and capital, and loan concentrations. Collateral and debt service coverage ratios, approval limits and other underwriting criteria are also specified. Policies also exist with respect to performing periodic credit reviews, the rating of loans, when loans should be placed on non-performing status and factors that should be considered in establishing the Bank’s allowance for loan losses. For additional information, refer to “Business of Benjamin Franklin Bancorp – Lending Activities,” on page [#].

     Management of Market Risk. Market risk is the risk of loss due to adverse changes in market prices and rates, and typically encompasses exposures such as sensitivity to changes in market interest rates, foreign currency exchange rates, and commodity prices. Benjamin Franklin has no exposure to foreign currency exchange or commodity price movements. Because net interest income is Benjamin Franklin’s primary source of revenue, interest rate risk is a significant market risk to which the Bank is exposed.

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     Interest rate risk is the exposure of Benjamin Franklin’s net interest income to adverse movements in interest rates. Net interest income is affected by changes in interest rates as well as by fluctuations in the level and duration of Benjamin Franklin’s assets and liabilities. Over and above the influence that interest rates have on net interest income, changes in rates may also affect the volume of lending activity, the ability of borrowers to repay variable rate loans, the volume of loan prepayments and refinancings, the flow and mix of deposits, and the market value of the Bank’s assets and liabilities.

     Exposure to interest rate risk is managed by Benjamin Franklin through periodic evaluations of the current interest rate risk inherent in its rate-sensitive assets and liabilities, coupled with determinations of the level of risk considered appropriate given the Bank’s capital and liquidity requirements, business strategy, and performance objectives. Through such management, Benjamin Franklin seeks to reduce the vulnerability of its net interest income to changes in interest rates.

     Strategies used by Benjamin Franklin to reduce the potential volatility of its earnings include:

  •   Emphasizing the origination and retention of adjustable-rate mortgage loans, variable rate commercial loans and variable rate home equity lines-of-credit;
 
  •   Investing in securities with relatively short maturities and/or expected average lives;
 
  •   Classifying nearly all of the investment portfolio as “available for sale” in order to provide for flexibility in liquidity management.

     Benjamin Franklin’s Asset/Liability Committee, comprised of several members of senior and middle management, is responsible for managing interest rate risk. On a quarterly basis, the Committee reviews with the Board of Directors its analysis of the Bank’s exposure to interest rate risk, the effect subsequent changes in interest rates could have on the Bank’s future net interest income, its strategies and other activities, and the effect of those strategies on Benjamin Franklin’s operating results. The Committee is also actively involved in the Bank’s planning and budgeting process as well as in determining pricing strategies for deposits and loans.

     The Committee’s primary method for measuring and evaluating interest rate risk is income simulation analysis. This analysis considers the maturity and repricing characteristics of assets and liabilities, as well as the relative sensitivities of these balance sheet components over a range of interest rate scenarios. Interest rate scenarios tested generally include instantaneous rate shocks, rate ramps over a one year period, and static (or flat) rates. The simulation analysis is used to measure the exposure of net interest income to changes in interest rates over a specified time horizon, usually a two year period.

     The table below sets forth, as of September 30, 2004, the estimated changes in Benjamin Franklin’s net interest income that would result from the designated instantaneous changes in the U.S. Treasury yield curve. Computations of prospective effects of hypothetical interest rate changes are based on numerous assumptions including relative levels of market interest rates, loan prepayments and deposit decay, and should not be relied upon as indicative of actual results.

         
    Percentage Change in Estimated
    Net Interest Income over 12 months
300 basis point increase in rates
     (6.85 %)
200 basis point increase in rates
     (4.21 %)
100 basis point increase in rates
     (1.86 %)
Flat interest rates
     —  
100 basis point decrease in rates
     (2.47 %)

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     As indicated in the table above, the result of an immediate 100 basis point increase in interest rates is estimated to decrease net interest income by 1.86% over a 12-month horizon, when compared to the flat rate scenario. For an immediate 200 basis point parallel increase in the level of interest rates, net interest income is estimated to decline by 4.21% over a 12-month horizon, when compared against the flat rate scenario. Inherent is these estimates is the assumption that transaction and savings account deposit rates would only increase by 25 basis points and that money market deposit account rates would only increase by 75 basis points for each 100 basis point increase in market interest rates. These assumptions are based on the Bank’s past experience with the changes in rates paid on these non-maturity deposits coincident with changes in market interest rates. The estimated change in net interest income from the flat rate scenario for a 100 basis point decline in the level of interest rates is a decrease of 2.47%, which assumes no decrease in savings and interest-bearing checking rates, and an average decrease in money market rates of 58 basis points. This simulation also incorporates the assumption that $29 million of short-term FHLBB borrowings at September 30, 2004 are replaced with longer-term borrowings with maturities ranging from 2 years to 2.75 years in mid-October, 2004. This lengthening of the average maturity of the Company’s borrowings in mid-October, 2004 had the effect of decreasing the liability-sensitivity of the balance sheet. This factor, coupled with the fact that the Company’s core deposit accounts reach their effective floors in the simulation analysis without giving full effect to the 100 basis point decline in rates, causes the estimated decline in net interest income of 2.47% when compared to the flat interest rate scenario.

     There are inherent shortcomings in income simulation, given the number and variety of assumptions that must be made in performing the analysis. The assumptions relied upon in making these calculations of interest rate sensitivity include the level of market interest rates, the shape of the yield curve, the degree to which certain assets and liabilities with similar maturities or periods to repricing react to changes in market interest rates, the degree to which non-maturity deposits react to changes in market rates, the expected prepayment rates on loans and mortgage-backed securities, the degree to which early withdrawals occur on certificates of deposit and the volume of other deposit flows. As such, although the analysis shown above provides an indication of Benjamin Franklin’s sensitivity to interest rate changes at a point in time, these estimates are not intended to and do not provide a precise forecast of the effect of changes in market interest rates on Benjamin Franklin’s net interest income and will differ from actual results.

     In its management of interest rate risk, Benjamin Franklin also relies on the analysis of its interest rate “gap,” which is the measure of the mismatch between the amount of Benjamin Franklin’s interest-earning assets and interest-bearing liabilities that mature or reprice within specified timeframes. An asset-sensitive position (positive gap) exists when there are more rate-sensitive assets than rate-sensitive liabilities maturing or repricing within a particular time horizon, and generally signifies a favorable effect on net interest income during periods of rising interest rates and a negative effect during periods of falling interest rates. Conversely, a liability-sensitive position (negative gap) would generally indicate a negative effect on net interest income during periods of rising rates and a positive effect during periods of falling rates.

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     The table below shows Benjamin Franklin’s interest sensitivity gap position as of September 30, 2004, indicating the amount of interest-earning assets and interest-bearing liabilities that are anticipated to mature or reprice in each of the future time periods shown. Generally, these assets and liabilities are shown in the table based on the earlier of the time remaining to repricing or contractual maturity. However, residential mortgage loans and mortgage-backed securities have been presented in a manner that also incorporates the estimated effects of prepayment assumptions. Interest-bearing checking, savings and money market deposit accounts are assumed to have annual rates of withdrawal (decay rates) of 12.7%, 46.1% and 47.7%, respectively.

                                                         
                    More than   More than   More than        
            More than   two years   three years   four years        
    Up to   one year to   to three   to four   to five   More than    
    one year
   two years
   years
   years
   years
   five years
   Total
    (Dollars in thousands)
Interest-earning assets:
                                                        
Loans
   $ 124,891     $ 61,882     $ 73,424     $ 31,222     $ 41,131     $ 44,442     $ 376,992  
Investment securities
     26,729       30,643       10,752       4,978       4,396       26,276       103,774  
Short-term investments
     6,831       —       —       —       —       —       6,831  
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		  
Total interest-earning assets
     158,451       92,525       84,176       36,200       45,527       70,718       487,597  
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		  
Interest-bearing liabilities:
                                                        
Savings deposits
     46,007       24,798       13,366       7,205       3,883       4,540       99,799  
Money market
     25,944       13,569       7,096       3,712       1,941       2,128       54,390  
NOW accounts
     3,198       2,792       2,437       2,128       1,857       12,767       25,179  
Certificates of deposits
     95,097       27,129       6,687       4,660       16       —       133,589  
Short-term borrowings
     29,000       —       —       —       —       —       29,000  
Long-term debt
     —       —       10,000       —       6,000       39,000       55,000  
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		  
Total interest-bearing liabilities
     199,246       68,288       39,586       17,705       13,697       58,435       396,957  
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		  
Interest rate sensitivity gap
   $ (40,795 )   $ 24,237     $ 44,590     $ 18,495     $ 31,830     $ 12,283     $ 90,640  
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		  
Interest rate sensitivity gap as a % of total assets
     (7.88 %)     4.68 %     8.61 %     3.57 %     6.15 %     2.37 %        
Cumulative interest rate sensitivity gap
     (40,795 )     (16,558 )     28,032       46,527       78,357       90,640          
 
    
 		      
 		      
 		      
 		      
 		      
 		          
Cumulative interest rate sensitivity gap as a % of total assets
     (7.88 %)     (3.20 %)     5.41 %     8.98 %     15.13 %     17.50 %        

     Certain factors may serve to limit the usefulness of the measurement of the interest rate gap. For example, interest rates on certain assets and liabilities are discretionary and may change in advance of, or may lag behind, changes in market rates. Certain assets, such as adjustable-rate loans, have features that may restrict the magnitude of changes in interest rates both on a short-term basis and over the life of the assets. Further, in the event of changes in interest rates, prepayment and early withdrawal levels would likely deviate significantly from those assumed in the gap analysis. Lastly, should interest rates increase, the ability of borrowers to service their debt may decrease.

     Liquidity Risk Management. Liquidity risk, or the risk to earnings and capital arising from an organization’s inability to meet its obligations without incurring unacceptable losses, is managed by Benjamin Franklin’s Treasurer, who monitors on a daily basis the adequacy of Benjamin Franklin’s liquidity position. Oversight is provided by the Asset/Liability Committee, which reviews Benjamin Franklin’s liquidity on a weekly basis, and by the Board of Directors, which reviews the adequacy of Benjamin Franklin’s liquidity resources on a monthly basis.

     Benjamin Franklin’s primary sources of funds are from deposits, amortization of loans, loan prepayments and the maturity of loans, mortgage-backed securities and other investments, and other funds provided by operations. While scheduled payments from amortization of loans and mortgage-

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backed securities and maturing loans and investment securities are relatively predictable sources of funds, deposit flows and loan prepayments can be greatly influenced by general interest rates, economic conditions and competition. Benjamin Franklin maintains excess funds in cash and short-term interest-bearing assets that provide additional liquidity. At September 30, 2004, cash and due from banks, short-term investments and debt securities maturing within one year totaled $31.8 million or 6.1% of total assets.

     Benjamin Franklin also relies on outside borrowings from the Federal Home Loan Bank of Boston, as an additional funding source. In the first nine months of 2004, Benjamin Franklin has expanded its use of Federal Home Loan Bank of Boston borrowings to fund growth in the loan portfolio and to assist in the management of its interest rate risk. Since December 31, 2003, Benjamin Franklin has increased Federal Home Loan Bank of Boston borrowings by $39 million to a total of $75 million outstanding as of September 30, 2004. On that date, Benjamin Franklin had the ability to borrow an additional $79.1 million from the Federal Home Loan Bank of Boston.

     Benjamin Franklin uses its liquidity to fund existing and future loan commitments, to fund maturing certificates of deposit and borrowings, to fund other deposit withdrawals, to invest in other interest-earning assets and to meet operating expenses. Benjamin Franklin anticipates that it will continue to have sufficient funds and alternative funding sources to meet its current commitments.

     Contractual Obligations. The following tables present information indicating various contractual obligations and commitments of Benjamin Franklin as of the dates indicated and the respective maturity dates:

                                         
    September 30, 2004
                    More than   More than    
                    One Year   Three Years    
            One Year or   through   Through   Over Five
    Total
   Less
   Three Years
   Five Years
   Years
    (Dollars in thousands)
Federal Home Loan Bank of Boston Advances (1)
   $ 75,000     $ 29,000     $ 10,000     $ 6,000     $ 30,000  
Subordinated debt
     9,000       —       —       —       9,000  
Other (2)
     4,557       1,153       2,216       1,188       —  
 
    
 		      
 		      
 		      
 		      
 		  
Total contractual obligations
   $ 88,557     $ 30,153     $ 12,216     $ 7,188     $ 39,000  
 
    
 		      
 		      
 		      
 		      
 		  

(1)   Secured under a blanket security agreement on qualifying assets, principally 1-4 Family Residential mortgage loans. Advances shown with a maturity of greater than three years may be called by the Federal Home Loan Bank of Boston during the period remaining to maturity.
 
(2)   Represents contracts for technology services and employee compensation.
                                         
    December 31, 2003
                    More than   More than    
                    One Year   Three Years    
            One Year or   through   Through   Over Five
    Total
   Less
   Three Years
   Five Years
   Years
    (Dollars in thousands)
Federal Home Loan Bank of Boston Advances (1)
   $ 36,000     $ —     $ —     $ —     $ 36,000  
Subordinated debt
     9,000       —       —       —       9,000  
Other (2)
     5,161       1,136       2,229       1,599       196  
 
    
 		      
 		      
 		      
 		      
 		  
Total contractual obligations
   $ 50,161     $ 1,136     $ 2,229     $ 1,599     $ 45,196  
 
    
 		      
 		      
 		      
 		      
 		  

(1)   Secured under a blanket security agreement on qualifying assets, principally 1-4 Family Residential mortgage loans. These advances may be called by the Federal Home Loan Bank of Boston during the period remaining to maturity.
 
(2)   Represents contracts for technology services and employee compensation.

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     Loan Commitments. The following tables present certain information about Benjamin Franklin Bank’s loan commitments outstanding as of the dates indicated:

                                         
    September 30, 2004
                    More than   More than    
                    One Year   Three Years    
            One Year or   through   through   Over Five
    Total
   Less
   Three Years
   Five Years
   Years
    (Dollars in thousands)
Commitments to grant loans (1)
   $ 7,055     $ 7,055     $ —     $ —     $ —  
Commercial loan lines-of-credit
     3,412       3,412       —       —       —  
Unused portion of home equity loans (2)
     28,839       —       —       —       28,839  
Unused portion of construction loans (3)
     11,483       10,083       1,400       —       —  
Unused portion of personal lines-of-credit(4)
     2,158       —       —       —       2,158  
 
    
 		      
 		      
 		      
 		      
 		  
Total loan commitments
   $ 52,947     $ 20,550     $ 1,400     $ —     $ 30,997  
 
    
 		      
 		      
 		      
 		      
 		  
                                         
    December 31, 2003
                    More than   More than    
                    One Year   Three Years    
            One Year or   through   through   Over Five
    Total
   Less
   Three Years
   Five Years
   Years
    (Dollars in thousands)
Commitments to grant loans(1)
   $ 11,567     $ 11,567     $ —     $ —     $ —  
Commitments to purchase real estate loans
     2,953       2,953       —       —       —  
Commercial loan lines-of-credit
     3,717       3,717       —       —       —  
Unused portion of home equity loans (2)
     24,812       0       —       —       24,812  
Unused portion of construction loans (3)
     10,264       8,065       2,199       —       —  
Unused portion of personal lines-of-credit(4)
     2,200       0       —       —       2,200  
 
    
 		      
 		      
 		      
 		      
 		  
Total loan commitments
   $ 55,513     $ 26,302     $ 2,199     $ —     $ 27,012  
 
    
 		      
 		      
 		      
 		      
 		  

General: Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract and generally have fixed expiration date or other termination clauses.

(1)   Commitments for loans are extended to customers for up to 180 days after which they expire.
 
(2)   Unused portions of home equity loans are available to the borrower for up to 10 years.
 
(3)   Unused portions of construction loans are available to the borrower for up to two years for development loans and up to one year for other construction loans.
 
(4)   Unused portion of checking overdraft lines-of-credit are available to customers in “good standing” indefinitely.

     Management of Other Risks. Two additional risk areas that receive significant attention by management and the Board are operational risk and compliance risk. Operational risk is the risk to earnings and capital arising from control deficiencies, problems with information systems, fraud, error or unforeseen catastrophes. Compliance risk is the risk arising from violations of, or nonconformance with, laws, rules, regulations, prescribed practices, internal policies and procedures or ethical standards. Compliance risk can expose the Company to fines, civil money penalties, payment of damages and the voiding of contracts.

     Benjamin Franklin addresses such risks through the establishment of comprehensive policies and procedures with respect to internal control, the management and operation of its information and communication systems, disaster recovery, and compliance with laws, regulations and banking ‘best practice’. Monitoring of the efficacy of such policies and procedures is performed through a combination of Benjamin Franklin’s internal audit program, through periodic internal and third-party compliance reviews, and through the ongoing attention of its managers charged with supervising compliance and

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operational control. Oversight of these activities is provided by the Risk Management Committee and the Audit and Risk Management Committee of the Board.

Off-Balance-Sheet Arrangements

     Benjamin Franklin Bancorp does not have any off-balance-sheet arrangements that have or are reasonably likely to have a current or future effect on its financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

Impact of Inflation and Changing Prices

     The financial statements, accompanying notes, and related financial data of Benjamin Franklin presented herein have been prepared in accordance with generally accepted accounting principles, which require the measurement of financial position and operating results in terms of historical dollar amounts without considering the changes in the relative purchasing power of money over time due to inflation. The impact of inflation is reflected in the increased cost of Benjamin Franklin operations. Most of Benjamin Franklin’s assets and liabilities are monetary in nature, and therefore the impact of interest rates has a greater impact on its performance than do the effects of general levels of inflation. Interest rates do not necessarily move in the same direction or to the same extent as the prices of goods and services.

Impact of Recent Accounting Standards

     In January 2003, the Financial Accounting Standards Board (“FASB”) issued Interpretation No. 46, “Consolidation of Variable Interest Entities.” (FIN 46) requires a variable interest entity to be consolidated by a company if that company is subject to a majority of the risk of loss from the variable interest entity’s activities or is entitled to receive a majority of the entity’s residual returns, or both. FIN 46 also requires disclosures about variable interest entities that a company is not required to consolidate, but in which it has a significant variable interest. On December 17, 2003, the FASB revised FIN 46 and deferred the effective date of FIN 46 to no later than the end of the first reporting period that ends after March 15, 2004. The adoption of FIN 46 and Interpretation No. 46R did not have a material effect on Benjamin Franklin’s financial statements.

     In April 2003, the FASB issued Statement of Financial Accounting Standards (“SFAS”) No. 149, “Amendment of Statement 133, Accounting for Derivative Instruments and Hedging Activities,” which amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts (collectively referred to as derivatives) and for hedging activities under SFAS No. 133. This Statement was effective for contracts and hedging relationships entered into or modified after June 30,2003. This Statement did not affect Benjamin Franklin’s consolidated financial statements.

     In March 2004, the Securities and Exchange Commission issued Staff Accounting Bulletin (SAB) No. 105, “Application of Accounting Principles to Loan Commitments,” which provides guidance regarding loan commitments that are accounted for as derivative instruments. In this SAB, the Securities and Exchange Commission determined that an interest rate lock commitment should generally be valued at zero at inception. The rate locks will continue to be adjusted for changes in value resulting from changes in market interest rates. This SAB did not have any effect on Benjamin Franklin Bancorp’s financial position or results of operations.

     On June 30, 2004, the FASB published an Exposure Draft, “Share-Based Payment,” an Amendment of FASB Statement Nos. 123 and 95 (the “Exposure Draft”). The FASB is proposing, among

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other things, amendments to SFAS No. 123 and thus, the manner in which share-based compensation, such as stock options, will be accounted for by both public and non-public companies. For public companies, the cost of employee services received in exchange for equity instruments including options and restricted stock awards generally would be measured at fair value at the grant date. The grant date fair value would be estimated using option-pricing models adjusted for the unique characteristics of those options and instruments, unless observable market prices for the same or similar options are available. The cost would be recognized over the requisite service period, often the vesting period, and would be re-measured subsequently at each reporting date through settlement date. The proposed changes in accounting would replace existing requirements under SFAS No. 123, “Accounting for Stock-Based Compensation,” and would eliminate the ability to account for share-based compensation transactions using APB Opinion No. 25, “Accounting for Stock Issued to Employees,” which does not require companies to expense options if the exercise price is equal to the trading price at the date of grant. Under the terms of the Exposure Draft, the accounting for similar transactions involving parties other than employees or the accounting for employee stock ownership plans that are subject to American Institute of Certified Public Accountants (“AICPA”) Statement of Position 93-6, “Employers’ Accounting for Employee Stock Ownership Plans,” would remain unchanged.

     On September 30, 2004, the FASB issued FASB Staff Position (“FSP”) Emerging Issues Task Force (“EITF”) Issue No. 03-1-1 delaying the effective date of paragraphs 10-20 of EITF 03-1, “The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments,” which provides guidance for determining the meaning of “other-than-temporarily impaired” and its application to certain debt and equity securities within the scope of SFAS No. 115, “Accounting for Certain Investments in Debt and Equity Securities,” and investments accounted for under the cost method. The guidance requires that investments which have declined in value due to credit concerns or solely due to changes in interest rates must be recorded as other-than-temporarily impaired unless the Bank can assert and demonstrate its intention to hold the security for a period of time sufficient to allow for a recovery of fair value up to or beyond the cost of the investment which might mean maturity. The delay of the effective date of EITF 03-1 will be superseded concurrent with the final issuance of proposed FSP Issue 03-1-a. Proposed FSP Issue 03-1-a is intended to provide implementation guidance with respect to all securities analyzed for impairment under paragraphs 10-20 of EITF 03-1. Management continues to closely monitor and evaluate how the provisions of EITF 03-1 and proposed FSP Issue 03-1-a will affect Benjamin Franklin Bancorp.

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MANAGEMENT OF BENJAMIN FRANKLIN BANCORP
AND BENJAMIN FRANKLIN BANK

Directors of Benjamin Franklin Bancorp

     The Board of Benjamin Franklin Bancorp (which is now known as the Board of Trustees but will be renamed the Board of Directors upon the completion of the conversion) currently consists of 11 members, each of whom belongs to one of three classes. Directors serve three-year staggered terms so that only approximately one-third of the Directors will be elected at each annual meeting of stockholders. Upon the completion of the Chart Bank acquisition, six directors from Chart Bank will join the Benjamin Franklin Bancorp Board of Directors: Richard E. Bolton Jr., the President and Chief Executive Officer of Chart Bank, Paul E. Capasso, Jonathan A. Haynes, Daniel F. O’Brien, Donald P. Quinn, and Neil E. Todreas. Such former directors of Chart Bank will be classified evenly, to the extent practicable, into each of the three Board classes. Each of the directors of Benjamin Franklin Bancorp also serves as a director of Benjamin Franklin Bank, and following the completion of the Chart Bank acquisition each of the designated Chart Bank directors named above will also join the Board of Directors of Benjamin Franklin Bank. The following table sets forth the current Directors’ names, ages as of November 15, 2004, the years when they began serving as Directors, and when their current term expires.

                         
            Date    
Name (1)
   Age
   Elected (2)
   Term Expires
Dr. Mary Ambler
     72       1977       2008  
William P. Bissonnette
     58       1997       2006  
William F. Brady, Jr., D.D.S.
     72       1985       2007  
John C. Fuller
     72       1998       2007  
Anne M. King
     75       1997       2006  
Richard D. Mann
     69       1967       2007  
John D. Murphy
     74       1984       2006  
Charles F. Oteri
     59       1984       2008  
Thomas R. Venables
     49       2002       2008  
Alfred H. Wahlers
     71       1973       2007  
Charles Yergatian
     76       1980       2006  

(1)   In addition to the Directors set forth in this table, six members of Chart Bank’s board of directors will be appointed to the Benjamin Franklin Bancorp Board of Directors upon completion of the Chart Bank acquisition: Richard E. Bolton, Jr., Paul E. Capasso, Jonathan A. Haynes, Daniel F. O’Brien, Donald P. Quinn, and Neil E. Todreas.
 
(2)   “Date Elected” indicates the date the Director first joined the Board of Trustees or Board of Directors of Benjamin Franklin Bancorp or Benjamin Franklin Bank.

     The principal occupation and business experience for the last five years for each of Benjamin Franklin Bancorp’s Directors is set forth below. All Directors have held their present positions for five years unless otherwise stated.

     Dr. Mary Ambler is a retired physician and a Professor Emeritus of Brown University.

     William P. Bissonnette is a partner in the firm of Little & Bissonnette, CPAs.

     William F. Brady, Jr., D.D.S. is a retired dentist.

     John C. Fuller is retired. He was formerly a Vice President and member of the Board of Directors of the Foxboro Company, a controls and instrumentation company located in Foxboro, Massachusetts.

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     Anne M. King, Clerk of Benjamin Franklin Bancorp and Benjamin Franklin Bank, is a retired journalist and currently works part-time in public relations.

     Richard D. Mann is an owner of Buckley & Mann, Inc., a textile manufacturer located in Norfolk, Massachusetts. He also serves as a member of the Board of Trustees of Clark-Cutler-McDermott Co. of Franklin, Massachusetts and of Draper Knitting Co. of Canton, Massachusetts.

     John D. Murphy is self-employed in the field of real estate.

     Charles F. Oteri is the Chief Executive Officer and Funeral Director of Oteri Funeral Home in Franklin, Massachusetts.

     Thomas R. Venables has served as President and Chief Executive Officer of Benjamin Franklin Bancorp and Benjamin Franklin Bank since 2002. Prior to 2002, Mr. Venables co-founded Lighthouse Bank of Waltham, Massachusetts in 1999 and served as its President and Chief Executive Officer. From 1998 to 1999, Mr. Venables was employed as a consultant with Marsh and McLennan Capital, Inc. He was employed by Grove Bank of Newton, Massachusetts from 1974 until it was acquired by Citizens Bank in 1997, serving as its President and Chief Executive Officer for the last 11 years of his tenure.

     Alfred H. Wahlers, is the Chairman of the Board of Benjamin Franklin Bancorp and Benjamin Franklin Bank. Mr. Wahlers is a retired insurance executive.

     Charles Yergatian is a retired residential real estate developer.

     Upon completion of the Chart Bank acquisition, six directors of Chart Bank will be appointed as directors of Benjamin Franklin Bancorp and Benjamin Franklin Bank. The principal occupation and business experience for the last five years for each of these Chart Bank directors is set forth below. All of these individuals have held their present positions for five years unless otherwise stated.

     Richard E. Bolton, Jr. has served as the President and Chief Executive Officer of Chart Bank since 1995. He has served as President of Chart Bank’s subsidiary, CSSI, since 1999. Mr. Bolton is 45 years old.

     Paul E. Capasso is the President of Capasso Realty Corporation located in Newton, Massachusetts, a real estate investment company specializing in apartment and office building ownership. Mr. Capasso is 48 years old.

     Jonathan A. Haynes is the President of Haynes Management, a real estate management firm located in Wellesley Hills, Massachusetts, and President of D.M. Bernardi, a general contracting firm located in Wellesley Hills, Massachusetts. Mr. Haynes is 48 years old.

     Daniel F. O’Brien is a certified public accountant and owner and president of O’Brien, Riley and Ryan, a CPA firm located in Boston. Mr. O’Brien is also the manager of State Street Wealthcare Advisors, LLC, a financial services company and State Street Consulting, LLC, a computer services consulting firm. Mr. O’Brien is also a practicing attorney. Mr. O’Brien is 49 years old.

     Donald P. Quinn is an attorney in private practice in Plymouth, Massachusetts. He was formerly a partner concentrating in commercial business and real estate matters at Goodwin Procter LLP, a law firm located in Boston. Mr. Quinn is 66 years old.

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     Neil E. Todreas is a professor of nuclear engineering and a professor of mechanical engineering at Massachusetts Institute of Technology. He also provides consulting services through his company, Energy Technology Associates, Inc. Mr. Todreas is 69 years old.

Meetings of the Board of Directors and Committees

     Benjamin Franklin Bank’s Board of Directors meets on a monthly basis and may hold additional special meetings. During 2004, the Board held twelve regular meetings, one of which was an annual meeting, and five special meetings.

     The Board of Trustees of Benjamin Franklin Bancorp held four regular meetings and eight special meetings during 2004. The Benjamin Franklin Bancorp regular meetings are held immediately before or after the Benjamin Franklin Bank Board meeting scheduled for that month. Following the conversion, the Board of Directors of Benjamin Franklin Bancorp is expected to meet on a monthly basis, or more often as may be necessary.

     The Boards of Directors of Benjamin Franklin Bank and Benjamin Franklin Bancorp currently have three standing Board Committees. Those Board Committees are the Executive Committee, the Audit and Risk Management Committee and the Compensation Committee. In addition, in anticipation of the conversion, the Board of Benjamin Franklin Bancorp will appoint a Governance Committee. Each of the Audit and Risk Management Committee, Compensation Committee and Governance Committee will be comprised solely of independent directors within the meaning of the rules promulgated under the Sarbanes-Oxley Act of 2002 and the Nasdaq listing requirements. The Board of Directors may, by resolution, designate one or more additional committees.

     The following committee descriptions set forth the current members of each of Benjamin Franklin Bancorp’s existing Board committee. However, immediately after completion of the Chart Bank acquisition, each committee will be reconstituted to integrate the six Chart Bank directors who will join the Board such that, to the extent feasible, former Chart directors serve on each committee in the same proportions as they serve on the Board of Directors. This committee reorganization is also likely to result in certain changes in the committee assignments of the current Benjamin Franklin Bancorp Board members.

     The Executive Committee currently consists of Dr. William Brady, Jr., William Bissonnette, Anne King, John Murphy, Thomas Venables, Alfred Wahlers, Charles Yergatian, with Dr. Brady serving as Chair. The Executive Committee meets semi-monthly to review ongoing activities and performance of the Bank. The Committee approves loan originations that exceed certain internal limitations, and reviews other loans originations, the monthly asset/liability report and monthly financial reports. The Executive Committee met [twenty-five] times during 2004.

     The Audit and Risk Management Committee currently consists of Charles Oteri, Dr. Mary Ambler, John Fuller, Richard Mann, with Mr. Oteri serving as Chair. Each member of the Audit and Risk Management Committee is an independent director as determined in accordance with the Sarbanes-Oxley Act of 2002 and the Nasdaq listing requirements. The Audit and Risk Management Committee, which operates under a charter, oversees the independent auditor relationship, the internal audit, risk management and compliance functions. The Audit and Risk Management Committee met [five] times during 2004.

     The Compensation Committee currently consists of William Bissonnette, Richard Mann, John Murphy, Charles Oteri and Alfred Wahlers, with Mr. Bissonnette serving as Chair. The Compensation Committee oversees Director and executive officer compensation and certain employee benefit plans.

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     The Governance Committee is expected to consist of six directors. The Governance Committee will be responsible for establishing criteria for Directors, making recommendations for the nomination of Directors, overseeing self-assessment evaluations for the Board and its Committees and addressing other governance issues.

Compensation of Directors

     During 2004, members of the Benjamin Franklin Bank Board of Directors received an annual retainer of $4,000 for their service on the Board and $450 for each Board meeting that they attended. The Chairman of the Board and the Clerk each received an additional $1,000 retainer for his or her service in that capacity. During 2004, members of the Executive Committee and the Audit and Risk Management Committee received $450 and $600, respectively, for each committee meeting that they attended, but did not receive a separate retainer, except that the Chairman of each committee and the Clerk of the Executive Committee received a $1,000 annual retainer.

     Upon completion of the conversion, and in recognition of Benjamin Franklin Bank’s increased size and change to public company form, the Board and Committee fees will be adjusted as follows. The annual Board retainer will increase to $10,000 per year, and the per meeting fee for Board of Directors meetings will increase to $500 per meeting attended. The annual retainer for the Chairman of the Board and the Clerk of Benjamin Franklin Bank will increase to $2,000 per year. The Executive Committee’s per meeting fee will also increase to $500, and the Executive Committee Chairman’s annual retainer will increase to $2,000, but the Executive Committee Clerk will no longer receive a retainer. Members of the Audit and Risk Management Committee, Governance Committee and Compensation Committee will not receive per meeting fees, but will receive annual retainers of $8,000, $3,000 and $3,000, respectively. The Chair of each of these three committees will receive an additional annual retainer of $2,000.

     Members of the Board who are employees of Benjamin Franklin Bank or Benjamin Franklin Bancorp do not receive these fees. Generally, Benjamin Franklin Bancorp’s Board of Directors meets immediately prior to or after a Benjamin Franklin Bank Board meeting. In such instances, directors do not receive additional fees for attendance at meetings of Benjamin Franklin Bancorp’s Board. Otherwise, the directors of Benjamin Franklin Bancorp receive the same fees they receive for attendance at a Benjamin Franklin Bank Board meeting.

Executive Officers

     The names, ages as of November 15, 2004, and positions of each of our executive officers, other than Thomas R. Venables, who is included in the description of directors above, are set forth below.

             
Name (1)
   Age
   Position
Claire S. Bean
    52     Executive Vice President/Chief Financial Officer, Benjamin Franklin Bank; Treasurer and Chief Financial Officer, Benjamin Franklin Bancorp
Stephen F. Banks
    52     Executive Vice President/Chief Information Officer, Benjamin Franklin Bank; Vice President, Benjamin Franklin Bancorp
Ronald E. Baron
    48     Senior Vice President/Treasurer, Benjamin Franklin Bank
Mariane E. Broadhurst
    47     Senior Vice President/Retail Banking, Benjamin Franklin Bank
Rose M. Buckley
    37     Senior Vice President/Senior Commercial Lending Officer, Benjamin Franklin Bank
Michael J. Piemonte
    50     Senior Vice President/Risk Management and Compliance, Benjamin Franklin Bank
Brian E. Ledwith
    36     Vice President/Senior Retail Lending Officer, Benjamin Franklin Bank
Kathleen P. Sawyer
    47     Vice President/Human Resources, Benjamin Franklin Bank

(Footnote on following page)

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(1)   Upon completion of the Chart Bank merger, two officers of Chart Bank, Alfred F. Odoardi and James Golden, are expected to become our executive officers. Their biographies are included below.

     Claire S. Bean has served as Executive Vice President/Chief Financial Officer of Benjamin Franklin Bank since July, 2004. Prior to her employment with Benjamin Franklin Bank, Ms. Bean served as Banking Advisor in the Capital Markets Group of FINCA International, Inc. and later as Regional Director of FINCA for Eastern Europe and NIS. From May 2002 to June 2003, Ms. Bean served as Director of Economic Development in Kyrgyzstan for the Mercy Corps, and from June 2003 to September 2003, she served as Manager of Micro-enterprise and Economic Development for the same organization. In addition, from 1999 to 2001, Ms. Bean served as Chief Operating Officer and Chief Financial Officer of Lighthouse Bank of Waltham, Massachusetts. From 1991 to 1997, Ms. Bean served as Executive Vice President/Treasurer of Grove Bank of Chestnut Hill, Massachusetts.

     Stephen F. Banks has served as Executive Vice President/Chief Information Officer of Benjamin Franklin Bank since January 2001. Mr. Banks joined the Bank in 1996 as Assistant Vice President/ Operations and was promoted to Senior Vice President of Systems/Operations in 1998. Prior to his employment at Benjamin Franklin Bank, Mr. Banks served as a data center manager at Bankline New England from 1995 to 1996 and as Vice President/Senior Operations Officer of Quincy Savings Bank from 1987 to 1995.

     Ronald E. Baron has served as Senior Vice President/Treasurer of Benjamin Franklin Bank since April, 2003. Mr. Baron joined the Bank in June 1997 as Assistant Vice President/Controller. He was promoted to Vice President/Treasurer and Controller in January 2002 and to Senior Vice President in April 2003. Prior to his employment at Benjamin Franklin Bank, Mr. Baron served as Vice President of Finance at Educor, Inc. for three years and was a Credit Specialist at Federal Deposit Insurance Corporation from 1991 to 1994.

     Mariane E. Broadhurst has served as Senior Vice President/Retail Banking of Benjamin Franklin Bank since April, 2003. Ms. Broadhurst joined the Bank in August 1992 as a Branch Manager. She was promoted to Assistant Vice President/Branch Administrator in December 1997 and in April 2002 was promoted to Vice President of Retail Banking. Prior to her employment with Benjamin Franklin Bank, Ms. Broadhurst was employed as an Assistant Treasurer/Branch Sales Manager of Heritage Bank in Worcester, Massachusetts, beginning in 1988.

     Rose M. Buckley has served as Senior Vice President/Senior Commercial Lending Officer of Benjamin Franklin Bank since April 2003. She joined the Bank in 1984 as a commercial loan officer. She was promoted to Assistant Vice President/Commercial Lending in April 1997 and to Vice President/Commercial Lending in April 1998.

     Michael J. Piemonte has served as Senior Vice President/Risk Management and Compliance of Benjamin Franklin Bank since December, 2003. He joined Benjamin Franklin Bank in March, 1998 as Assistant Vice President/Auditor/Compliance and Loan Review Officer in the Internal Audit Department. He became Assistant Vice President/Compliance Officer in the Compliance Department in July 2001 and became Vice President/Risk Management and Compliance in December 2001.

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     Brian E. Ledwith has served as Vice President/Senior Retail Lending Officer of Benjamin Franklin Bank since September, 2004. He joined the Bank in February, 2004 as Vice President/Commercial Lending. Prior to his employment with Benjamin Franklin Bank, Mr. Ledwith served as Vice President/Senior Loan Officer of Medway Cooperative Bank of Medway, Massachusetts. From 2000 to 2002, Mr. Ledwith served as Vice President of Commercial Lending Department of Strata Bank in Franklin, Massachusetts. In addition, from 1998 to April 2000, Mr. Ledwith served as Vice President of Commercial Banking of Rockland Trust in Brockton, Massachusetts.

     Kathleen P. Sawyer has served as Vice President/Human Resources of Benjamin Franklin Bank since April, 2003. Ms. Sawyer served as a Human Resources Officer of Benjamin Franklin Bank from 1996 to 2000, and as Assistant Vice President/Human Resources from 2000 to 2003.

     Upon completion of the Chart Bank acquisition, the following two officers of Chart Bank will become executive officers of Benjamin Franklin Bank.

     Alfred J. Odoardi, has served as Senior Vice President — Commercial Lending of Chart Bank and Senior Loan Officer since August 1995. Upon completion of the Chart Bank acquisition, Mr. Odoardi is expected to become Senior Vice President of Benjamin Franklin Bank and will be responsible for the commercial business loan department that Benjamin Franklin Bank intends to establish following the acquisition. Mr. Odoardi is 55 years old.

     James Golden is Vice President of Chart Bank’s ATM cash management and settlement services subsidiary, CSSI, a position he has held since October 2001. Previously, he served as Chart Bank’s Vice President — Retail Banking, from October 2001 to October 2003, and as a branch manager from August 1997 to January 2000. Mr. Golden has also served Chart Bank as its Compliance Officer since October 1997 and as its Security Officer and CRA Officer since January 1998. Upon completion of the Chart Bank acquisition, Mr. Golden is expected to become a Vice President of Benjamin Franklin Bank and will continue to be responsible for the CSSI ATM cash management and settlement services business. Mr. Golden is 41 years old.

Indemnification and Limitation of Liability

     The By-Laws of Benjamin Franklin Bancorp provide that each director of Benjamin Franklin Bancorp and each officer appointed or elected by the Board of Directors of Benjamin Franklin Bancorp who is serving in the level of vice president or above shall be indemnified by Benjamin Franklin Bancorp to the maximum extent permitted by law against all expenses and other liabilities incurred by such person in connection with any threatened, pending or completed proceeding in which he or she is involved as a result of (i) his or her serving or having served as a director of Benjamin Franklin Bancorp, (ii) his or her serving or having served as an officer of Benjamin Franklin Bancorp, or (iii) while he or she is or was serving as a director or officer of Benjamin Franklin Bancorp, his or her serving or having served in any capacity with respect to any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise at the request or direction of Benjamin Franklin Bancorp. The Board of Directors may, in its discretion, indemnify officers serving below the level of vice president and employees of Benjamin Franklin Bancorp. The articles of organization of Benjamin Franklin Bancorp provide that, to the maximum extent permitted by the Massachusetts Business Corporation Act, no director shall be personally liable to Benjamin Franklin Bancorp or its stockholders for monetary damages for breach of fiduciary duty as a director notwithstanding any provision of law imposing such liability.

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Executive Officer Compensation

     The following table sets forth certain information as to the total remuneration paid by Benjamin Franklin Bancorp and Benjamin Franklin Bank during the fiscal year ended December 31, 2004 to the President and Chief Executive Officer of Benjamin Franklin Bancorp and Benjamin Franklin Bank and the four other most highly compensated executive officers of Benjamin Franklin Bancorp and Benjamin Franklin Bank who receive total annual compensation in excess of $100,000. Each of the individuals listed on the table below is referred to as a “named executive officer.”

                                         
Name and Principal Position
with Benjamin Franklin		   Annual Compensation
    
Bancorp and Benjamin                           Other Annual   All Other
Franklin Bank
   Year
   Salary
   Bonus
   Compensation
   Compensation
Thomas R. Venables, President and Chief Executive Officer
     2004                                  

Employment and Change in Control Agreements

     Employment Agreements. In connection with the conversion, Benjamin Franklin Bancorp will enter into employment agreements with its Chief Executive Officer, Mr. Venables, and its two Executive Vice Presidents, Ms. Bean and Mr. Banks. The agreements provide for an annual base salary, subject to increase (which increased amount becomes a floor below which the officer’s base salary may not fall during the term of the agreement), and certain benefits. They also guarantee customary corporate indemnification and errors and omissions insurance coverage throughout the employment term and for six years after termination. The current base salary of each of Mr. Venables, Ms. Bean and Mr. Banks is $[       , $       , and $       ], respectively.

     The initial term of each agreement is three years, with the term automatically extended by one day for each day that the officer is employed by Benjamin Franklin Bancorp and Benjamin Franklin Bank, although the automatic extensions may be discontinued at any time by Benjamin Franklin Bancorp, Benjamin Franklin Bank or the officer. For a one-year period following termination of the executive’s employment, the executive must adhere to a non-competition restriction and refrain from soliciting employees or certain large commercial loan customers. Such provision is not operative after the occurrence of a change in control of Benjamin Franklin Bancorp.

     In the event the officer’s employment is terminated by Benjamin Franklin Bancorp or Benjamin Franklin Bank for other than “specially-defined cause” or by the officer for “good reason,” each as defined in the agreements, the officer will be entitled to receive a lump sum severance benefit equal to three times the highest yearly compensation paid to the officer in the three fiscal years preceding the termination, plus certain other benefits. These benefits include continuation of disability and medical benefits for three years following termination, an adjustment to the officer’s pension, and acceleration of all vesting of stock awards and options. If the executive’s employment is terminated following a change in control, the non-competition and nonsolicitation provisions described above would not apply.

     Mr. Venables and Ms. Bean would also be entitled to receive an additional tax indemnification payment if payments under the employment agreements or any other payments triggered liability under Section 280G of the Internal Revenue Code as an excise tax constituting “excess parachute payments.” Under applicable law, the excise tax is triggered by change in control-related payments that equal or exceed three times the executive’s average annual compensation over the five calendar years preceding

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the change in control. The excise tax equals 20.0% of the amount of the payment in excess of one times the executive’s average compensation over the preceding five calendar year period. In the event payments and benefits under Mr. Banks’s employment agreement, together with other payments and benefits he may receive, would constitute an excess parachute payment under Section 280G of the Internal Revenue Code, such payments would be reduced to an amount necessary to avoid such payments constituting parachute payments.

     Change in Control Agreements. Benjamin Franklin Bancorp will also enter into change in control agreements with six of its senior officers in connection with the conversion. The change in control agreements provide for a lump sum severance payment equal to approximately one times (in the case of Mr. Baron, Mr. Ledwith, Mr. Piemonte and Ms. Sawyer) or two times (in the case of Ms. Broadhurst and Ms. Buckley) the officer’s base salary plus the highest annual bonus paid during the three most recent calendar years and certain other benefits upon termination of the officer’s employment under certain circumstances.

     Pursuant to the terms of the change in control agreements, these severance payments will be triggered if, within two years after a “change in control,” as defined in the agreements, of Benjamin Franklin Bancorp or Benjamin Franklin Bank, the officer’s employment is terminated for any reason other than death, deliberate dishonesty or gross misconduct of the officer with respect to Benjamin Franklin Bancorp or any of its subsidiaries, or conviction of the officer for the commission of a felony. These payments will also be triggered if the officer terminates his or her employment following: (i) a reduction in the officer’s annual base salary; (ii) a relocation of the offices of Benjamin Franklin Bancorp or Benjamin Franklin Bank at which the officer is principally employed by more than a specified number of miles; (iii) a failure of Benjamin Franklin Bancorp or Benjamin Franklin Bank to pay any portion of compensation due to the officer within seven days of the date such compensation is due; (iv) a failure by Benjamin Franklin Bancorp or Benjamin Franklin Bank to continue the officer’s participation in any material compensation, incentive bonus or benefit plan (or in a successor plan) or the failure of a successor in interest to make available its benefits plans to the officer on a basis that is not substantially less favorable than the successor generally affords to its other employees holding similar positions; or (v) a failure of Benjamin Franklin Bancorp or Benjamin Franklin Bank to obtain a satisfactory agreement from any successor to assume and agree to perform the officer’s change in control agreement.

     In addition, if the officer’s employment is terminated for the reasons described above, Benjamin Franklin Bancorp will continue to pay to the officer the disability and medical benefits existing as of and at the level in effect on the date of termination, at no greater cost to the officer than the officer is currently paying, for one year (in the case of Mr. Baron, Mr. Ledwith, Mr. Piemonte and Ms. Sawyer) or two years (in the case of Ms. Broadhurst and Ms. Buckley). In the event payments and benefits under the change in control agreements, together with other payments and benefits the officers may receive, would constitute an excess parachute payment under Section 280G of the Internal Revenue Code, such payments would be reduced to an amount necessary to avoid such payments constituting parachute payments.

Benefit Plans

     Employee Stock Ownership Plan. In anticipation of the conversion, Benjamin Franklin Bank has established an employee stock ownership plan for its employees. Employees who have been credited with at least 1,000 hours of service during a consecutive twelve-month period and who have attained age 21 will be eligible to participate in Benjamin Franklin Bank’s employee stock ownership plan.

     As part of the conversion, the employee stock ownership plan intends to purchase 8.0% of the common stock issued in the offering (including shares issued to the Benjamin Franklin Bank Charitable Foundation). Benjamin Franklin Bank anticipates that the employee stock ownership plan will borrow

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from Benjamin Franklin Bancorp (or a subsidiary established for that purpose) to fund these purchases. The loan from Benjamin Franklin Bancorp to the employee stock ownership plan will be repaid principally from Benjamin Franklin Bank’s contributions to the employee stock ownership plan over a period of 30 years and the collateral for the loan will be the stock purchased by the employee stock ownership plan. The interest rate for the employee stock ownership plan loan from Benjamin Franklin Bancorp will be fixed and is expected to be at Benjamin Franklin Bank’s prime rate at the date the loan is entered into with the employee stock ownership plan. Benjamin Franklin Bank and Benjamin Franklin Bancorp may, in any plan year, make additional discretionary contributions for the benefit of plan participants in cash, shares of common stock, or other property. The timing, amount and manner of future contributions to the employee stock ownership plan will be affected by various factors, including prevailing regulatory policies, the requirements of applicable laws and regulations and market conditions.

     Shares purchased by the Benjamin Franklin Bank employee stock ownership plan will be held in a suspense account and released for allocation to participants on a pro rata basis as debt service payments are made. Shares released from the employee stock ownership plan will be allocated to each eligible participant’s employee stock ownership plan account based on the ratio of each such participant’s compensation, as defined, to the total compensation of all eligible employee stock ownership plan participants. Forfeitures shall be reallocated among remaining participating employees.

     Upon the completion of two years of service, the account balances of participants within the employee stock ownership plan will become 20.0% vested. The vested percentage of participants’ account balances will thereupon be increased by an additional 20.0% for each additional year of service, until account balances reach 100.0% vesting upon the completion of six years of service. Credit is given for years of service with Benjamin Franklin Saving Bank or any of its affiliates prior to the adoption of the employee stock benefit plan. In the event of a “change in control,” as defined in the employee stock ownership plan, however, participants will become immediately fully vested in their account balances. Participants will also become fully vested in their account balances upon death, disability, retirement, termination of this plan, or the permanent and complete discontinuance of contributions by Benjamin Franklin Bank and any of its affiliates to this plan. Benefits may be payable upon retirement or separation from service.

     It is currently expected that an independent corporate trustee will be appointed by Benjamin Franklin Bank to serve as the trustee of the Benjamin Franklin Bank employee stock ownership plan. Under the terms of the Benjamin Franklin Bank employee stock ownership plan, the trustee must generally vote all allocated shares held in the employee stock ownership plan in accordance with the instructions from the participating employees. Unallocated shares and allocated shares for which no written instructions have been received by the trustee regarding voting will be voted by the trustee in a manner calculated to most accurately reflect the instructions the trustee has received from participants regarding allocated shares, and must be voted in a manner determined by the trustee to be solely in the best interests of the participants and beneficiaries of the plan.

     Generally accepted accounting principles require that any third party borrowing by the Benjamin Franklin Bank employee stock ownership plan be reflected as a liability on Benjamin Franklin Bank’s balance sheet. If the employee stock ownership plan borrows the necessary funds from Benjamin Franklin Bancorp, the loan will not be treated as a liability but instead will be excluded from stockholders’ equity. If the employee stock ownership plan purchases newly issued shares from Benjamin Franklin Bancorp, total stockholders’ equity would neither increase nor decrease, but per share stockholders’ equity and per share net earnings would decrease as the newly issued shares are allocated to the employee stock ownership plan participants.

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     Benjamin Franklin Bank’s employee stock ownership plan will be subject to the requirements of the Employee Retirement Income Security Act of 1974, as amended, and the applicable regulations of the Internal Revenue Service and the Department of Labor.

     401(k) Plan. Benjamin Franklin Bank maintains the SBERA 401(k) Plan as adopted by Benjamin Franklin Bank, a tax-qualified plan under Section 401(a) of the Internal Revenue Code with a cash or deferred arrangement under Section 401(k) of the Internal Revenue Code. In general, all salaried and hourly employees who are at least age 21 become eligible to make salary reduction contributions in the 401(k) plan and to receive matching contributions from Benjamin Franklin Bank under the 401(k) plan on the first day of the month following the completion of three months of employment with Benjamin Franklin Bank.

     Under the 401(k) plan, participants may elect to have Benjamin Franklin Bank contribute up to 75.0% of their compensation to the 401(k) plan, subject to the dollar limitations imposed by the Internal Revenue Code. Benjamin Franklin Bank currently makes matching contributions to the 401(k) plan equal to 200.0% of the first 3.0% of compensation deferred by a participant. Compensation for purposes of the 401(k) plan generally consists of total taxable income of a participant as reported on Form W-2 with all pre-tax contributions added, but excluding compensation received from the Vacation Buy Back Program. The level of matching contributions under the 401(k) plan may change from time to time.

     Currently, participants in the 401(k) plan may direct the investment of their accounts in several types of investment funds. In connection with the conversion, Benjamin Franklin Bank has amended the 401(k) plan to permit participants in the 401(k) plan to direct the investment of their accounts in common stock of Benjamin Franklin Bancorp, which shares will be held in a newly formed Employer Stock Fund. Investment in the Employer Stock Fund will generally be limited to 20.0% of a participant’s 401(k) account, but a participant may waive this limitation upon signing a certification that he or she understands the risk of Benjamin Franklin Bancorp stock ownership. Participants in the 401(k) plan will be given the opportunity to direct the 401(k) plan trustee to subscribe for shares of Benjamin Franklin Bancorp common stock in the conversion based on their individual subscription priorities, using the funds in the participants’ 401(k) plan accounts. See “The Conversion and the Offering—Subscription Offering and Subscription Rights” on page [#].

     Participants are always 100.0% vested in their elective deferrals and related earnings under the 401(k) plan. In addition, participants become fully vested in matching contributions and related earnings when such contributions are deposited. Participants may receive distributions from the 401(k) plan in the form of a single lump payment or installment payments.

     Benefit Restoration Plan. In connection with the conversion, Benjamin Franklin Bank intends to establish the Benefit Restoration Plan, a non-tax-qualified plan that will provide restorative payments to certain executives who are prevented from receiving earned benefits under Benjamin Franklin Bank’s 401(k) plan or employee stock ownership plan because of limitations in the Internal Revenue Code applicable to tax-qualified plans. The initial participants in the benefit restoration plan will be Mr. Venables and Ms. Bean, with the Board of Directors of Benjamin Franklin Bank designating certain management personnel or highly compensated employees as additional participants in the benefit restoration plan from time to time. The Board of Directors of Benjamin Franklin Bank may also limit which benefits such additional participants will receive under the benefit restoration plan.

     Eligible participants will receive a restorative payment equal to the amount of additional benefits the participants would receive under the 401(k) plan if there were no income limitations imposed by the Internal Revenue Code. Eligible participants will also receive a restorative payment in lieu of shares that cannot be allocated to participants under the employee stock ownership plan due to the legal limitations

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imposed on tax-qualified plans. In addition, eligible participants who “retire” before the repayment in full of the loan to the employee stock ownership plan will receive restorative payments equal to the projected value of shares of Benjamin Franklin Bancorp common stock that would have been allocated to the executive over the remaining term of any loan, as if employment had continued through the full term of the loan, regardless of limitations in the Internal Revenue Code. “Retirement” is defined in the benefit restoration plan as the first to occur of termination of employment at any time following satisfaction of the requirements for early or normal retirement under the employee stock ownership plan (unless otherwise permitted by the Benjamin Franklin Bank Board of Directors), death while employed as a full-time employee, or the occurrence of a “change in control,” regardless of whether the participant continues in the employ of the employer or any successor following the change in control.

     Executive Salary Continuation Agreement and Supplemental Executive Retirement Plan. Each of Mr. Venables and Mr. Banks is also entitled to retirement benefits pursuant to the terms of a Salary Continuation Agreement with Benjamin Franklin Bank and Benjamin Franklin Bancorp (in the case of Mr. Venables) or a Supplemental Executive Retirement Plan (“SERP”) with Benjamin Franklin Bank (in the case of Mr. Banks).

     Under the terms of his Salary Continuation Agreement, Mr. Venables is entitled to an annual retirement benefit, payable in monthly installments for a period of 20 years, equal to 75.0% of his total compensation for the last full calendar year of employment, but reduced by his annual annuity retirement benefit from Benjamin Franklin Bank’s contributions to his 401(k) plan and his annual social security benefit. Under the terms of his SERP, Mr. Banks is entitled to an annual retirement benefit, payable in monthly installments for a period of 15 years, equal to 65.0% of the average of his annual compensation during the 36 consecutive calendar months during his last ten years of employment by Benjamin Franklin Bank in which such compensation was the highest, but reduced by the annual amount of benefits payable to him arising from Benjamin Franklin Bank’s contributions to his 401(k) plan, the annual amount of benefits payable to him from any other non-qualified supplemental retirement plan of Benjamin Franklin Bank, the annual amount of benefits payable to him from any qualified defined benefit pension plan of Benjamin Franklin Bank, and one-half of his annual social security benefit.

     In connection with the conversion, Benjamin Franklin Bancorp intends to amend the Salary Continuation Agreement of Mr. Venables and the SERP of Mr. Banks to include a provision that any amounts payable under these agreements will be reduced by amounts payable to each executive under the employee stock ownership plan and, in the case of Mr. Venables, the benefit restoration plan. Benjamin Franklin Bancorp also intends to amend the Salary Continuation Agreement of Mr. Venables so that his annual retirement benefit, payable under the Salary Continuation Agreement, will be reduced by one-half of his annual social security benefit, instead of the full amount of his annual social security benefit. These amendments will not be implemented until the Internal Revenue Service issues a release interpreting a recent amendment to the Internal Revenue Code affecting deferred compensation arrangements. In addition, after the IRS has issued its interpretive release, Benjamin Franklin Bancorp intends to implement an additional salary continuation agreement to provide for supplemental retirement benefits to Ms. Bean, upon terms similar to those of Mr. Banks’s agreement.

     Employee Salary Continuation Plan. Benjamin Franklin Bancorp has established, effective upon completion of the conversion, an employee salary continuation plan, which will provide eligible employees with severance pay benefits and other benefits in the event that their employment is terminated within a year after a change in control of Benjamin Franklin Bancorp or Benjamin Franklin Bank. Severance benefits will be equal to the greater of (i) two weeks’ salary for each year or partial year of service, up to a maximum of 52 weeks’ salary, or (ii) the applicable “minimum benefit.” For Senior Vice Presidents or higher, the “minimum benefit” is 52 weeks’ salary, for Vice Presidents, it is 39 weeks’ salary, for Assistant Vice Presidents, it is 26 weeks’ salary, for all other exempt employees, it is 13

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weeks’ salary, for all other full-time employees, it is 8 weeks’ salary, and for all part-time employees, it is 6 weeks’ salary. Employees entitled to severance also receive continued employer-paid life and health insurance coverage for the greater of (a) six months or (b) the number of weeks of salary continuation benefits to which the employee is entitled under the plan, as well as professional outplacement and job assistance services. These benefits are also available to employees who resign because they have not been offered a comparable position following a change in control. A “comparable position” is defined as a position which is offered to an employee where (a) there is no reduction in base salary or scheduled hours, and (b) the employee will be principally employed at a location not more than 25 miles from the office where the employee is principally employed immediately prior to the change in control.

     Directors Fee Continuation Plan. Benjamin Franklin Bancorp has established, effective upon completion of the conversion, a directors fee continuation plan, which provides certain benefits to all eligible non-employee members of the boards of directors of Benjamin Franklin Bank and Benjamin Franklin Bancorp upon retirement. A director is eligible to receive these benefits (provided that the director was not terminated for cause) if the director has served as a director for three years or more with Benjamin Franklin Bank or Benjamin Franklin Bancorp. Service with a corporate predecessor, such as Chart Bank, is not included in determining whether this three-year service requirement has been met.

     A director who has served on the board for at least 15 years (10 years for those who have attained age 70) is entitled to receive an annual payment, commencing upon termination of service and payable for five years, equal to the average total yearly fees for services as a director paid by Benjamin Franklin Bancorp or Benjamin Franklin Bank to the director for the three calendar years preceding the year of the director’s retirement. Service with a corporate predecessor, such as Chart Bank, is included in determining the amount of the normal retirement benefit. Eligible directors who retire prior to attaining the full 15 (or 10) years of service are entitled to receive a reduced retirement benefit, based upon the director’s number of years of service, payable annually for five years following termination of service.

     In the event of a “change in control,” as defined in the directors fee continuation plan, if an eligible director’s service is terminated or if the director is not proposed for reelection within three years following the “change in control,” the director is entitled to receive a full normal retirement benefit (as if he had served as a director for 15 years) as a lump sum upon termination of service. An eligible director who becomes disabled prior to age 70 is also entitled to receive the normal retirement benefit, payable in equal installments over five years and commencing upon termination of service. In addition, upon the death of an eligible director prior to termination of service, the director’s beneficiary is entitled to receive a normal retirement benefit, and upon the death of an eligible director after retirement, the director’s beneficiary is entitled to receive the remainder of any benefit payments to which the director is entitled, with each such benefit payable annually and commencing upon the death of the director.

     Stock-Based Incentive Plan. Following the conversion we intend to implement a stock-based incentive plan that will provide for grants of stock options and restricted stock to directors, officers and employees. The stock-based incentive plan cannot be established sooner than six months after the offering and, if implemented less than one year after the offering, would require the approval of our stockholders by two-thirds of the outstanding shares of Benjamin Franklin Bancorp common stock. If the stock-based incentive plan is implemented more than one year after the offering, the stock-based incentive plan must be approved by a majority of the shares of Benjamin Franklin Bancorp present and voting. If such plan is adopted less than one year after completion of the offering, the number of options granted and restricted shares awarded under the plan may not exceed 10.0% and 4.0%, respectively, of the total shares issued in the offering, including shares issued to the Benjamin Franklin Bank Charitable Foundation. However, these limitations would not apply if such stock-based incentive plan is implemented one year or more after the completion of the offering. Finally, if adopted within one year,

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the stock-based incentive plan would be subject to such other limitations as may be imposed by the Massachusetts Commissioner of Banks, including the following requirements:

  •   Non-employee directors in the aggregate may not receive more than 30.0% of the options and restricted awards authorized under the plan;
 
  •   Any one non-employee director may not receive more than 5.0% of the options and restricted awards authorized under the plan;
 
  •   Any officer or employee may not receive more than 25.0% of the options and restricted awards authorized under the plan;
 
  •   The options and restricted awards may not vest more rapidly than 20.0% per year, beginning on the first anniversary of stockholder approval of the plan; and
 
  •   Accelerated vesting is not permitted except for death or disability.

     After the first anniversary of the conversion, we may amend the plan to change or remove these restrictions. If we adopt a stock option plan within one year after the conversion, we expect to amend the plan later to remove these restrictions and to provide for accelerated vesting in cases of retirement and change of control. We may obtain the shares needed for this plan by issuing additional shares or through stock repurchases.

     We have not decided whether we will implement this plan before or after the one-year anniversary of the conversion.

Transactions with Directors and Executive Officers

     Federal law and regulation generally require that all loans or extensions of credit to directors and executive officers must be made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with the general public and must not involve more than the normal risk of repayment or present other unfavorable features. However, regulations also permit directors and executive officers to receive the same terms through benefit or compensation plans that are widely available to other employees, as long as the director or executive officer is not given preferential treatment compared to the other participating employees. Pursuant to such a program, loans have been extended to directors and executive officers, which loans are on substantially the same terms as those prevailing at the time for comparable transactions with the general public. These loans do not involve more than the normal risk of repayment or present other unfavorable features.

     The six directors of Chart Bank who will become directors of Benjamin Franklin Bancorp are stockholders of Chart Bank, and in such capacity they have a material interest in the merger agreement between Benjamin Franklin Bancorp and Chart Bank. The following table summarizes the number of shares of Benjamin Franklin Bancorp common stock and amount of cash that each of these directors will receive in the merger in exchange for his shares of Chart Bank common stock and Chart Bank options. The information in the table is based on the number of shares of Chart Bank common stock in which a director has or shares a direct or indirect pecuniary interest as of December 6, 2004, which in some cases is different from the number of shares that the director beneficially owns, and assumes that each director exchanges 55% of his Chart Bank shares for shares of Benjamin Franklin Bancorp common stock and 45% of his Chart Bank shares for cash and that all Chart Bank options are cashed out at the closing rather than being exercised prior to the closing.

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Director
   Shares
   Cash
Richard E. Bolton, Jr.
     14,375     $ 947,638  
Paul E. Capasso
     35,711       292,237  
Jonathan A. Haynes (1)
     115,287       943,340  
Daniel F. O’Brien
     17,250       141,166  
Donald P. Quinn (2)
     58,863       481,680  
Neil E. Todreas
     116,273       951,342  

     
 
(1)   Includes 40,792 shares and $333,790 in which Mr. Haynes’s children have a pecuniary interest.
 
(2)   Includes 7,120 shares and $34,289 in which Mr. Quinn’s spouse has a pecuniary interest, but with respect to which Mr. Quinn disclaims beneficial ownership.

     See “The Acquisition of Chart Bank—Interests of Chart Bank’s Directors and Officers in the Merger” for a description of the payments and waiver agreement and consulting and non-competition agreement we have entered into with Richard E. Bolton Jr. and the severance agreement between Alfred Odoardi and Chart Bank. Mr. Odoardi is expected to become an executive officer of Benjamin Franklin Bank after completion of the Chart Bank acquisition.

Compensation Committee Interlocks and Insider Participation

     The Board of Trustees of Benjamin Franklin Bancorp established a Compensation Committee in connection with the adoption of various compensation plans and agreements in anticipation of the conversion. The members of the Compensation Committee are William Bissonnette, Richard Mann, John Murphy, Charles Oteri and Alfred Wahlers.

     No person now serving as a member of the Compensation Committee is a current or former officer or employee of Benjamin Franklin Bancorp or Benjamin Franklin Bank or engaged in certain transactions with Benjamin Franklin Bancorp or Benjamin Franklin Bank that are required to be disclosed by SEC regulations. Additionally, there are no compensation committee “interlocks,” which generally means that no executive officer of Benjamin Franklin Bancorp or Benjamin Franklin Bank served as a director or member of the compensation committee of another entity, one of whose executive officers serves as a Director or member of the Compensation Committee.

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PURCHASES BY BENJAMIN FRANKLIN BANCORP MANAGEMENT IN THE OFFERING

     The following table sets forth information regarding intended common stock purchases by each of our directors and executive officers and their associates, and by all directors and executive officers as a group, assuming the availability of shares. In the event the individual maximum purchase limitation is increased, persons subscribing for the maximum amount may increase their purchase order. This table excludes shares to be purchased by the employee stock ownership plan. The table also shows the shares to be issued in the Chart Bank acquisition to the directors and officers of Chart Bank who will become our directors and officers after completion of the acquisition, assuming that 55% of the shares of Chart Bank common stock beneficially owned by these persons are exchanged for shares of Benjamin Franklin Bancorp common stock and that all Chart Bank options are cashed out at the closing rather than being exercised prior to the closing.

                                         
    Proposed Purchases in           Total Common Stock
    the Offering
   Shares to be   to be Held
Current Benjamin Franklin   Number of   Aggregate   Issued in the   Number of   % of Total
Bancorp Directors
   Shares
   Price
   Acquisition
   Shares
   Outstanding (1)
Dr. Mary Ambler
     20,000     $ 200,000       0       20,000       0.26 %
William P. Bissonnette
     10,000       100,000       0       10,000       0.13 %
William F. Brady, Jr., D.D.S
     15,000       150,000       0       15,000       0.19 %
John C. Fuller
     10,000       100,000       0       10,000       0.13 %
Anne M. King
     5,000       50,000       0       5,000       0.06 %
Richard D. Mann
     20,000       200,000       0       20,000       0.26 %
John D. Murphy
     15,000       150,000       0       15,000       0.19 %
Charles F. Oteri
     5,000       50,000       0       5,000       0.06 %
Thomas R. Venables
     25,000       250,000       0       25,000       0.32 %
Alfred H. Wahlers
     5,000       50,000       0       5,000       0.06 %
Charles Yergatian
     15,000       150,000       0       15,000       0.19 %
Chart Bank Directors who will become Benjamin Franklin Bancorp Directors
                                        
                                       
Richard E. Bolton, Jr.
     0       0       14,375 (2)     14,375 (2)     0.18 %
Paul E. Capasso
     0       0       35,711 (3)     35,711 (3)     0.46 %
Jonathan A. Haynes
     0       0       210,472 (4)     210,472 (4)     2.70 %
Daniel F. O’Brien
     0       0       17,250       17,250       0.22 %
Donald P. Quinn
     0       0       431,047 (5)     431,047 (5)     5.53 %
Neil E. Todreas
     0       0       116,273       116,273       1.50 %
Current Executive Officers of Benjamin Franklin Bancorp who are not Directors
                                        
                                       
Claire S. Bean
     25,000     $ 250,000       0       25,000       0.32 %
Stephen F. Banks
     6,500       65,000       0       6,500       0.08 %
Rose M. Buckley
     5,000       50,000       0       5,000       0.06 %
Mariane E. Broadhurst
     10,000       100,000       0       10,000       0.13 %
Ronald E. Baron
     250       2,500       0       250       *  
Michael J. Piemonte
     1,000       10,000       0       1,000       0.01 %
Kathleen P. Sawyer
     2,500       25,000       0       2,500       0.03 %
Brian E. Ledwith
     1,500       15,000       0       1,500       0.02 %
Chart Officers who will become Benjamin Franklin Bancorp Executive Officers
                                        
                                       
Alfred F. Odoardi
     0       0       0       0       0  
James Golden
     0       0       0       0       0  
All Directors and Executive Officers as a Group
                             1,021,878       13.10 %
     
*  Less than 0.01%
  (Footnotes on following page)

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(1)   Based on an assumed 7,801,575 shares outstanding, including 5,000,000 shares issued in the offering at the midpoint of the offering range, 400,000 shares issued to the Benjamin Franklin Bank Charitable Foundation and 2,401,575 shares issued to the Chart Bank stockholders in the acquisition.
 
(2)   Includes 6,765 shares of common stock held by a voting trust of which Richard E. Bolton, Sr. is the sole trustee and with respect to which Mr. Bolton, Jr. has sole investment power.
 
(3)   Includes 14,943 shares of common stock held by a voting trust of which Donato D. Capasso is the sole trustee and with respect to which Mr. P. Capasso has sole investment power.
 
(4)   Includes 149,574 shares of common stock held by The Charter Voting Trust – 1996, of which Mr. Haynes is the sole trustee and with respect to which Mr. Haynes has sole voting power. Mr. Haynes may also be deemed to have sole investment power with respect to 54,389 of the 149,574 shares of common stock held by The Charter Voting Trust – 1996, including 40,792 shares beneficially owned by Mr. Haynes’s children.
 
(5)   Includes (a) 47,557 shares of common stock held in an IRA account of Mr. Quinn and (b) 383,490 shares of common stock held by Village Voting Trust - 1995, of which Mr. Quinn is the sole trustee and with respect to which Mr. Quinn has sole voting power. Mr. Quinn may also be deemed to have sole investment power with respect to 12,151 of the 383,490 shares of common stock held by Village Voting Trust – 1995, including 6,698 shares beneficially owned by Mr. Quinn’s spouse and 1,690 shares beneficially owned by a limited partnership of which Mr. Quinn is the sole general partner.

BUSINESS OF CHART BANK

General

     Chart Bank, A Cooperative Bank, is a Massachusetts cooperative bank that was formed in 1985. Chart Bank primarily conducts its business from two banking offices in Waltham, Massachusetts and one banking office in Newton, Massachusetts. Chart Bank is engaged principally in the business of investing in various types of residential and commercial mortgages, consumer and commercial loans, and investment securities, funded primarily with deposits from the general public and loan proceeds from the Federal Home Loan Bank of Boston. Chart Bank offers a wide variety of deposit and loan products and services to individual and commercial customers. Additionally, Chart Bank, through its subsidiary, Creative Strategic Solutions, Inc., or CSSI, manages cash for owners of automatic teller machines, or ATMs, and provides related cash management services to a nationwide customer base.

     As a Massachusetts cooperative bank, Chart Bank is regulated by the Massachusetts Division of Banks, the FDIC and the Cooperative Central Bank. Chart Bank’s deposits are insured by the FDIC up to FDIC limits (generally $100,000 per depositor) and by the Share Insurance Fund of the Cooperative Central Bank for the portion of deposits in excess of that insured by the FDIC. Chart Bank is also a member of the Federal Home Loan Bank System.

     Chart Bank’s main office is located at 75 Moody Street, Waltham, Massachusetts 02453. Its telephone number is 781-398-2700.

Market Area

     Chart Bank’s primary market area is centered in Waltham, Massachusetts, where its main office is located, and Newton, Massachusetts, both approximately 10 miles west of Boston, and includes other cities and towns of Middlesex County, Massachusetts. The majority of Chart Bank’s customers reside in or maintain their principal offices in Middlesex County, Massachusetts. Middlesex County, and Waltham and Newton in particular, have a relatively diversified employment base, with employment spread among most economic sectors. Education-related employment is particularly significant in this area. Other dominant sectors include services, manufacturing and wholesale/retail trade.

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     According to published statistics, Middlesex County’s population has grown by 0.1% since the year 2000 to a total of 1,470,000 in 2004. Per capita income for the county has grown by 3.8% since 2000 to $36,220, which is 21.4% higher than that of Massachusetts and 50.3% higher than the United States as a whole. Median household income for Middlesex County was $69,234 in 2004, which is 21.4% higher than that of Massachusetts and 49.0% higher than the U.S. average. The unemployment rate for Middlesex County stood at 4.4% as of August 2004, lower than the average for Massachusetts of 4.6% and the U.S. average of 5.4%.

     Chart Bank faces significant competition from savings, cooperative and commercial banks, as well as from a variety of non-bank financial institutions. Many of these competitors are larger and have a state-wide, regional or national presence, and have greater financial resources than Chart Bank.

Lending Activities

     Chart Bank’s principal business is lending, and loans represent a large portion of Chart Bank’s assets. Chart Bank’s lending activity has focused on the origination of commercial loans secured by liens on real estate and first mortgage loans for the purchase, refinance or construction of residential properties in Chart Bank’s market area. Currently, Chart Bank maintains the commercial loans it originates in its loan portfolio, although, in some instances, other financial institutions may also participate in these loans. Chart Bank typically sells the fixed-rate residential mortgages and retains the adjustable-rate residential mortgages that it originates. Loans secured by mortgages on a borrower’s principal residence are generally viewed as the least vulnerable to major economic changes and at the same time provide an attractive source of interest income.

     Chart Bank’s loan portfolio consists of many types of loans, including residential mortgage loans, including home equity lines-of-credit, monthly installment loans for consumers, as well as commercial loans that include lines-of-credit, short-term loans, Small Business Administration loans and real estate loans for business customers. The following table summarizes the composition of Chart Bank’s loan portfolio as of the dates indicated:

                                                 
                    December 31,
    September 30, 2004
   2003
   2002
    Amount
   Percent
   Amount
   Percent
   Amount
   Percent
    (Dollars in thousands)
Real estate mortgage loans:
                                                
Residential (1)
   $ 64,953       36.63 %   $ 37,666       26.61 %   $ 33,719       27.09 %
Commercial
     99,682       56.21 %     91,788       64.85 %     83,619       67.16 %
Construction
     8,225       4.64 %     6,498       4.59 %     3,327       2.67 %
 
    
 		      
 		      
 		      
 		      
 		      
 		  
 
     172,860       97.48 %     135,952       96.05 %     120,665       96.92 %
 
    
 		      
 		      
 		      
 		      
 		      
 		  
Commercial loans:
                                                
Secured
     4,029       2.27 %     3,913       2.76 %     3,182       2.56 %
Unsecured
     95       0.06 %     512       0.36 %     255       0.20 %
 
    
 		      
 		      
 		      
 		      
 		      
 		  
 
     4,124       2.33 %     4,425       3.12 %     3,437       2.76 %
 
    
 		      
 		      
 		      
 		      
 		      
 		  
Consumer loans:
                                                
Consumer share secured
     132       0.07 %     741       0.53 %     61       0.05 %
Other consumer
     209       0.12 %     429       0.30 %     338       0.27 %
 
    
 		      
 		      
 		      
 		      
 		      
 		  
 
     341       0.19 %     1,170       0.83 %     399       0.32 %
 
    
 		      
 		      
 		      
 		      
 		      
 		  
Total loans
     177,325       100.00 %     141,547       100.00 %     124,501       100.00 %
 
            
 		              
 		              
 		  
Allowance for loan losses
     (1,753 )             (1,657 )             (1,536 )        
 
    
 		              
 		              
 		          
Loans, net
   $ 175,572             $ 139,890             $ 122,965          
 
    
 		              
 		              
 		          

(1)   Includes home equity lines-of-credit.

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     Loan Originations, Purchases and Sales. The following table sets certain information concerning Chart Bank’s loan activity during the periods indicated:

                                                         
    For the    
    Nine Months Ended    
    September 30,
   For the Years Ended December 31,
    2004
   2003
   2003
   2002
   2001
   2000
   1999
    (Dollars in thousands)
Loans at beginning of period
   $ 141,547     $ 124,501     $ 124,501     $ 127,475     $ 122,548     $ 108,338     $ 84,710  
Originations:
                                                        
Residential mortgage
     18,222       12,711       16,318       6,628       10,658       10,446       15,279  
Commercial mortgage
     20,294       16,501       26,260       28,738       18,815       19,889       23,965  
Construction
     10,566       6,325       9,161       6,968       2,515       4,882       5,010  
Commercial
     1,799       2,556       3,770       801       2,315       2,053       4,006  
Consumer and other
     967       2,653       2,687       4,041       2,262       822       2,642  
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		  
Total loans originated
     51,848       40,746       58,196       47,176       36,565       38,092       50,902  
Purchases of mortgage loans
     14,002       —       —       —       —       —       —  
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		  
Total additions
     65,850       40,746       58,196       47,176       36,565       38,092       50,902  
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		  
Deduct:
                                                        
Principal loan repayments and prepayments
     30,078       32,415       41,151       50,179       31,594       24,051       27,375  
Charge-offs (recoveries), net
     (6 )     (1 )     (1 )     (29 )     44       (79 )     (101 )
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		  
Total deductions
     30,072       32,414       41,150       50,150       31,638       23,972       27,274  
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		  
Net increase (decrease) in loans
     35,778       8,332       17,046       (2,974 )     4,927       14,120       23,628  
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		  
Loans at end of period
   $ 177,325     $ 132,833     $ 141,547     $ 124,501     $ 127,475     $ 122,548     $ 108,338  
 
    
 		      
 		      
 		      
 		      
 		      
 		      
 		  

Investment Activities

     Chart Bank’s investment portfolio is an important component of its balance sheet, and interest and dividends represent an important source of its earnings. Chart Bank’s investment policy is designed to complement its lending activities, provide an alternative source of income through interest, dividends and capital gains, diversify Chart Bank’s assets and improve liquidity while minimizing Chart Bank’s tax liability. Investment decisions are made in accordance with Chart Bank’s investment policy and are based upon the quality of a particular investment, its inherent risks, the composition of the balance sheet, market expectations, Chart Bank’s liquidity and income needs and how the investment fits within Chart Bank’s interest rate risk strategy. Chart Bank’s investment portfolio is comprised of obligations of various federal agencies, and corporate equity securities. At September 30, 2004, Chart Bank’s investment portfolio totaled $35.5 million, which represents approximately 13.9% of total assets.

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     The following table presents the amortized cost, gross unrealized gains and losses and fair value of Chart Bank’s securities at the dates indicated. At December 31, 2003 and 2002, all securities consisted of federal agency obligations.

                                 
            Gross   Gross    
    Amortized   Unrealized   Unrealized   Fair
    Cost
   Gain
   Losses
   Value
    (Dollars in thousands)
September 30, 2004
                                
Securities available for sale:
                                
Federal agency obligations
   $ 2,009     $ 26     $ —     $ 2,035  
Marketable equity securities
     1,614       59       (39 )     1,634  
 
    
 		      
 		      
 		      
 		  
Total securities available for sale
   $ 3,623     $ 85     $ (39 )   $ 3,669  
 
    
 		      
 		      
 		      
 		  
Securities held to maturity:
                                
Federal agency obligations
   $ 31,826     $ 66     $ (150 )   $ 31,742  
 
    
 		      
 		      
 		      
 		  
December 31, 2003
                                
Securities available for sale
   $ 5,292     $ 112     $ —     $ 5,404  
 
    
 		      
 		      
 		      
 		  
Securities held to maturity
   $ 23,965     $ 113     $ (118 )   $ 23,960  
 
    
 		      
 		      
 		      
 		  
December 31, 2002
                                
Securities available for sale
   $ 16,142     $ 364     $ —     $ 16,506  
 
    
 		      
 		      
 		      
 		  
Securities held to maturity
   $ 13,026     $ 146     $ —     $ 13,172  
 
    
 		      
 		      
 		      
 		  

Deposit Activities and Other Sources of Funds

     Deposits are the major external source of funds for Chart Bank’s lending and investment activities. Chart Bank offers a wide variety of deposit accounts with a range of interest rates and terms, including, among others, interest bearing checking, non-interest bearing checking, regular savings, money market savings, NOW accounts and certificates of deposit. Chart Bank also generates funds internally from loan principal repayments and prepayments and maturing investment securities. In addition, Chart Bank is a member of the Federal Home Loan Bank of Boston which permits Chart Bank to borrow from the Federal Home Loan Bank of Boston to fund asset growth when other sources of funds are unavailable. At September 30, 2004, Chart Bank had total deposits of $216.0 million and the ability to borrow a total of $37.2 million from the Federal Home Loan Bank of Boston, in addition to the outstanding borrowings from the Federal Home Loan Bank of Boston of $22.0 million.

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     The following tables set forth certain information relative to the composition of Chart Bank’s deposit accounts at the dates indicated:

                                                 
                    At December 31,
    At September 30, 2004
   2003
   2002
    Amount
   Percent
   Amount
   Percent
   Amount
   Percent
    (Dollars in thousands)
Demand deposits
   $ 33,205       15.38 %   $ 30,458       17.32 %   $ 27,701       16.27 %
NOW accounts
     11,266       5.22 %     9,601       5.46 %     9,384       5.51 %
Money market deposits
     64,383       29.81 %     50,977       29.00 %     49,848       29.27 %
Other savings accounts
     14,630       6.77 %     21,479       12.22 %     18,988       11.15 %
 
    
 		      
 		      
 		      
 		      
 		      
 		  
Total non-certificate accounts
     123,484       57.18 %     112,515       64.00 %     105,921       62.20 %
 
    
 		      
 		      
 		      
 		      
 		      
 		  
Term certificates less than $100,000
     48,762       22.58 %     32,013       18.21 %     38,094       22.37 %
Term certificates of $100,000 or more
     43,726       20.24 %     31,273       17.79 %     26,264       15.43 %
 
    
 		      
 		      
 		      
 		      
 		      
 		  
Total certificate accounts
     92,488       42.82 %     63,286       36.00 %     64,358       37.80 %
 
    
 		      
 		      
 		      
 		      
 		      
 		  
Total deposits
   $ 215,972       100.00 %   $ 175,801       100.00 %   $ 170,279       100.00 %
 
    
 		      
 		      
 		      
 		      
 		      
 		  

Cash Management Business — CSSI Subsidiary

     Chart Bank’s subsidiary, Creative Strategic Solutions, Inc. or CSSI, manages cash for owners of ATMs and provides related cash management services to a nationwide customer base. CSSI’s primary business is supplying cash funds to ATMs owned by independent service organizations, who are its customers, and processing the transactions effected at those ATMs. Currently, CSSI manages over 1700 ATMs for numerous independent service organizations in the United States. CSSI typically receives fees based on the amount of cash in the ATMs and in transit, tied to a floating index rate such as the Prime Rate. Chart Bank considers this business as an important part of its asset liability management program, and as of September 30, 2004 was using $31.2 million, or approximately 12.2% of its total assets, in this business. The cash used in this business remains an asset of Chart Bank. CSSI employs independent, bonded transit companies to transport the cash, and also insures the cash in ATMs against theft or loss through common insurance carriers.

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Non-Performing Assets

     The table below sets forth the amounts and categories of our non-performing assets at the dates indicated. At each date presented, we had no troubled debt restructurings (loans for which a portion of interest or principal has been forgiven and loans modified at interest rates materially less than current market rates).

                                                 
    At
September		   At December 31,
    30, 2004
   2003
   2002
   2001
   2000
   1999
    (Dollars in thousands)
Non-accrual loans:
                                                
Residential mortgage
   $ 119     $ 120     $ —     $ —     $ —     $ —  
Commercial mortgage
     —       —       —       —       —       —  
Construction
     —       —       —       —       —       —  
Commercial
     —       —       —       —       —       —  
Consumer and other
     —       —       —       —       —       —  
 
    
 		      
 		      
 		      
 		      
 		      
 		  
Total non-accrual loans
   $ 119     $ 120     $ —     $ —     $ —     $ —  
 
    
 		      
 		      
 		      
 		      
 		      
 		  
Loans greater than 90 days delinquent:
                                                
and still accruing:
                                                
Residential mortgage
   $ —     $ —     $ —     $ —     $ —     $ —  
Commercial mortgage
     —       68       —       —       —       351  
Construction
     —       —       —       —       —       —  
Commercial
     25       25       25       230       —       —  
Consumer and other
     —       —       —       —       —       —  
 
    
 		      
 		      
 		      
 		      
 		      
 		  
Total loans 90 days and still accruing
   $ 25     $ 93     $ 25     $ 230     $ —     $ 351  
 
    
 		      
 		      
 		      
 		      
 		      
 		  
Total non-performing loans
   $ 144     $ 213     $ 25     $ 230     $ —     $ 351  
 
    
 		      
 		      
 		      
 		      
 		      
 		  
Total real estate owned
   $ —     $ —     $ —     $ —     $ —     $ —  
 
    
 		      
 		      
 		      
 		      
 		      
 		  
Total non-performing assets
   $ 144     $ 213     $ 25     $ 230     $ —     $ 351  
 
    
 		      
 		      
 		      
 		      
 		      
 		  
Ratios:
                                                
Non-performing loans to total loans
     0.08 %     0.15 %     0.02 %     0.18 %     — %     0.32 %
Non-performing assets to total assets
     0.06 %     0.10 %     0.01 %     0.13 %     — %     0.25 %

Employees

     Chart Bank’s workforce at September 30, 2004 was 48 employees, of whom 44 were full-time and 4 were part-time.

Properties

     Chart Bank currently conducts its business through its main office located in Waltham, Massachusetts and two other full-service banking offices. In addition, Chart Bank operates eight off-site ATMs.

                                 
    Location
   Leased or Owned
   Year Opened
   Expiration of Lease
Main Office:
   75 Moody Street, Waltham,                        
 
   Massachusetts 02453   Leased     1996       March 2008
Branch Offices:
   1290 Main Street, Waltham,                        
 
   Massachusetts 02451   Owned     1996       N/A  
 
   40 Austin Street, Newton,                        
 
   Massachusetts 02460   Owned     1998       N/A  
Administrative
   295 Weston Street                        
Office:
   Waltham, Massachusetts 02453   Leased     1999       April 2005

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF CHART BANK

     The following discussion should be read in conjunction with “Selected Consolidated Financial Information of Chart Bank” and the Consolidated Financial Statements of Chart Bank, A Cooperative Bank and Subsidiaries and related Notes appearing elsewhere in this prospectus.

Forward-Looking Statements

     This management’s discussion and analysis of Chart Bank’s financial condition and results of operations contains forward-looking statements that are based on assumptions and describe future plans, strategies and expectations of Chart Bank, including those with respect to its pending acquisition by Benjamin Franklin Bank. These forward-looking statements are generally identified by use of the words “believe,” “expect,” “intend,” “anticipate,” “estimate,” “project,” or similar expressions. Chart Bank’s ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse effect on the operations of Chart Bank include, but are not limited to, changes in interest rates, general economic conditions, legislative/regulatory changes, monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury and the Federal Reserve Board, the quality or composition of the loan or investment portfolios, demand for loan products, deposit flows, competition, demand for financial services in Chart Bank’s market area and accounting principles and guidelines. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. Subject to applicable laws and regulations, Chart Bank does not undertake—and specifically disclaims any obligation—to publicly release the result of any revisions which may be made to any forward-looking statements to reflect events or circumstances after the date of the statements or to reflect the occurrence of anticipated or unanticipated events.

General

     Chart Bank’s results of operations depend primarily on net interest income, which is the difference between the interest income earned on its interest-earning assets, such as loans and securities, and the interest expense on its interest-bearing liabilities, such as deposits and borrowings. Chart Bank also generates noninterest income primarily from fees charged on customers’ accounts and income generated through Chart Bank’s subsidiary, CSSI. CSSI provides cash to ATMs owned by independent service organizations nationwide. Fees are collected from the independent service organizations for managing the ATMs and for the use of the cash in the machines. Chart Bank’s noninterest expenses primarily consist of employee compensation and benefits, occupancy, advertising and other operating expenses. Chart Bank’s results of operations are affected by general economic and competitive conditions, notably changes in market interest rates, government policies and regulations. Chart Bank exceeded all of its regulatory capital requirements at December 31, 2003 and at September 30, 2004.

Critical Accounting Policies

     The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of income and expenses during the reporting periods.

     Note 1 of the Notes to Chart Bank’s consolidated financial statements includes a summary of the significant accounting policies and methods used in the preparation of Chart Bank’s consolidated financial statements. The following is a brief discussion of the critical accounting policy used by Chart Bank in preparation of its financial statements.

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     Allowance For Loan Losses. The most significant estimate made by Chart Bank in the preparation of its financial statements relates to determining the allowance for loan losses. The actual amount of loan losses could differ significantly from this estimate. Senior management has discussed the development and selection of this accounting estimate, the assumptions on which this estimate is based, and the related disclosures with the audit committee of Chart Bank’s Board of Directors.

     Chart Bank devotes significant attention to maintaining high loan quality through its underwriting standards, active servicing of loans and aggressive management of nonperforming assets. The allowance for loan losses is maintained at a level estimated by management to provide adequately for probable loan losses inherent in the loan portfolio. Probable loan losses are estimated based on a monthly review of the loan portfolio, loss experience, specific problem loans, economic conditions and other pertinent factors. In assessing risks inherent in the portfolio, management considers the risk of loss on non-performing and classified loans including an analysis of collateral in each situation. Chart Bank’s methodology for assessing the appropriateness of the allowance for loan losses includes several key elements. Problem loans are identified and analyzed individually to detect specific losses including an analysis of estimated cash flows for impaired loans. The loan portfolio is also segmented into pools of loans that are similar in type and risk characteristics (i.e., commercial, consumer and mortgage loans). Loss factors based on Chart Bank’s historical charge offs are applied using Chart Bank’s historical experience and may be adjusted for significant factors that, in management’s judgment, affect the collectability of the portfolio as of the evaluation date. Additionally, the portfolio is segmented into pools based on internal risk ratings with estimated loss factors applied to each rating category. Other factors considered in determining probable loan losses are any changes in concentrations in the portfolio, trends in loan growth, the relationship and trends in recent years of recoveries as a percentage of prior charge offs and peer bank’s loss experience. Although management believes that it uses the best information available to establish the allowance for loan losses, future adjustments to the allowance for loan losses may be necessary, and results of operations could be adversely affected if circumstances differ substantially from the assumptions used in making the determinations. Furthermore, while Chart Bank believes it has established its existing allowance for loan losses consistent with accounting principles generally accepted in the United States of America, there can be no assurance that regulators, in reviewing Chart Bank’s loan portfolio, will not request Chart Bank to increase its allowance for loan losses. In addition, because future events affecting borrowers and collateral cannot be predicted with certainty, there can be no assurance that the existing allowance for loan losses is adequate or that increases will not be necessary should the quality of any loans deteriorate as a result of the factors discussed above. Material increases in the allowance for loan losses will adversely affect Chart Bank’s financial condition and results of operations.

Changes in Chart Bank’s Financial Condition and Results of Operations

     The following analysis discusses changes in the financial condition and results of operations for the nine months ended September 30, 2004 and 2003, and for the years ended December 31, 2003 and 2002, and should be read in conjunction with Chart Bank’s consolidated financial statements and the notes thereto, appearing elsewhere herein.

Comparison of Chart Bank’s Financial Condition at September 30, 2004 and December 31, 2003

     General. Chart Bank’s total assets increased $46.4 million, or 22.1%, to $256.3 million at September 30, 2004 as compared to $209.9 million at December 31, 2003. The increase in assets was mainly attributable to a $35.7 million increase in net loans, a $6.1 million increase in securities and a $3.9 million increase in cash and cash equivalents. The growth in assets was primarily funded by an increase in deposit account balances of $40.2 million and advances from the Federal Home Loan Bank of Boston of $6.1 million.

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     Net Loans. Net loans increased $35.7 million, or 25.5%, from $139.9 million at December 31, 2003 to $175.6 million at September 30, 2004, primarily as a result of increased residential mortgage loans, commercial mortgage loans and construction loans. Residential mortgage loans increased $27.3 million, or 72.4%, from $37.7 million at December 31, 2003 to $65.0 million at September 30, 2004 mainly due to additional residential mortgage loan originations primarily resulting from refinancing activity in a low interest rate environment and the purchase of $14.0 million of residential mortgage loans from another institution. Commercial mortgage loans increased $7.9 million, or 8.6%, from $91.8 million at December 31, 2003, to $99.7 million at September 30, 2004, primarily due to additional commercial mortgage originations. Construction loans increased $1.7 million, or 26.6%, from $6.5 million at December 31, 2003 to $8.2 million at September 30, 2004, primarily due to additional construction loan originations.

     Securities. Available for sale securities decreased $1.7 million, or 32.1%, from a fair value of $5.4 million at December 31, 2003 to a fair value of $3.7 million at September 30, 2004. Held to maturity securities increased $7.9 million from an amortized cost of $24.0 million at December 31, 2003 to $31.8 million at September 30, 2004. The decrease in available for sale securities and the increase in held to maturity securities primarily resulted from the reinvestment of proceeds from maturities, calls and sales of available for sale securities in held to maturity securities and an additional net increase of $6.2 million of federal agency securities, which were classified as held to maturity securities.

     Cash and Cash Equivalents. Cash and cash equivalents increased $3.9 million, or 11.2%, from $34.9 million at December 31, 2003 to $38.8 million at September 30, 2004, primarily as a result of a $4.2 million, or 15.5%, increase in the cash deployed in ATMs by CSSI from $27.0 million at December 31, 2003 to $31.2 million at September 30, 2004 and a $1.0 million increase in short-term investments, partially offset by a $1.3 million decrease in cash and due from banks primarily resulting from fluctuations in the ordinary course of business.

     Deposits and Borrowed Funds. Deposits totaled $216.0 million at September 30, 2004, an increase of $40.2 million, or 22.9%, compared to $175.8 million at December 31, 2003. Certificates of deposit increased $29.2 million, or 46.1%, from $63.3 million at December 31, 2003 to $92.5 million at September 30, 2004. Savings and money market accounts increased $6.6 million, or 9.0%, from $72.5 million at December 31, 2003 to $79.0 million at September 30, 2004. NOW and demand deposit accounts increased $4.4 million, or 11.0%, from $40.0 million at December 31, 2003 to $44.5 million at September 30, 2004. Borrowed funds from the Federal Home Loan Bank of Boston increased $6.1 million, or 38.1%, from $15.9 million to $22.0 million at September 30, 2004.

     Non-performing Assets, Delinquencies and Allowance for Loan Losses. Non-performing assets, all of which consisted of loans, totaled $144,000 at September 30, 2004, compared to $213,000 at December 31, 2003, a decrease of $69,000.

     On a monthly basis, management informs the Board of Directors of the amount of loans delinquent for more than 30 days, all loans in foreclosure and all foreclosed and repossessed property that Chart Bank owns. Chart Bank ceases accruing interest on mortgage loans when principal or interest payments are delinquent 90 days or more unless management determines that the loan principal and interest is fully secured and in the process of collection. Once the accrual of interest on a loan is discontinued, all interest previously accrued is reversed against current period interest income.

     The allowance for loan losses was $1.8 million at September 30, 2004, an increase of $96,000 from the $1.7 million recorded at December 31, 2003. The allowance for loan losses as a percentage of gross loans was 0.99% at September 30, 2004 as compared to 1.17% at December 31, 2003. The

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allowance for loan losses as a percentage of non-performing loans was 1,217% at September 30, 2004 as compared to 778% at December 31, 2003.

     The allowance for loan losses consists of a formula allowance for various loan portfolio classifications and an amount for loans identified as impaired, if necessary. The allowance is an estimate, and ultimate losses may vary from current estimates. See “—Critical Accounting Policies—Allowance for Loan Losses” on page [#] for a discussion of the factors considered in making this estimate and the risks associated and the risks associated with using those factors. Changes in the estimate are recorded in the results of operations in the period in which they become known, along with provisions for estimated losses incurred during that period.

     A portion of the allowance for loan losses is not allocated to any specific segment of the loan portfolio. This unallocated reserve is maintained for two primary reasons: there exists an inherent subjectivity and imprecision to the analytical processes employed, and the prevailing business environment, as it is affected by changing economic conditions and various external factors, which may impact the portfolio in ways currently unforeseen. Moreover, management has identified certain risk factors, which could impact the degree of loss sustained within the portfolio. These include: market risk factors, such as the effects of economic variability on the entire portfolio, and unique portfolio risk factors that are inherent characteristics of Chart Bank’s loan portfolio. Market risk factors may consist of changes to general economic and business conditions that may impact Chart Bank’s loan portfolio customer base in terms of ability to repay and that may result in changes in value of underlying collateral. Unique portfolio risk factors may include industry or geographic concentrations, or trends that may exacerbate losses resulting from economic events which Chart Bank may not be able to fully diversify out of its portfolio.

     Due to the inherent imprecise nature of the loan loss estimation process and ever changing conditions, these risk attributes may not be adequately captured in data related to the formula-based loan loss components used to determine allocations in Chart Bank’s analysis of the adequacy of the allowance for loan losses. Management, therefore, has established and maintains an unallocated allowance for loan losses. The amount of the unallocated allowance was $22,000 at September 30, 2004 as compared to $79,000 at December 31, 2003.

     Stockholders’ Equity. Total stockholders’ equity increased $147,000, or 0.8%, to $17.5 million at September 30, 2004 compared to $17.4 million at December 31, 2003. The increase is due primarily to net income of $784,000 for the nine months ended September 30, 2004, partially offset by $597,000 in dividends paid to stockholders during the period ended September 30, 2004 and a reduction in accumulated other comprehensive income. The decrease in accumulated other comprehensive income was due to a reduction in the unrealized gain on securities available for sale, net of taxes of $40,000. The decline in the unrealized gain was due to the realization of $53,000, or $32,000 net of taxes, of security gains during the nine months ended September 30, 2004 and a higher interest rate environment reducing the fair value of Chart Bank’s fixed income portfolio.

Comparison of Chart Bank’s Operating Results for the Nine Months Ended September 30, 2004 and 2003

     Net Income. Net income for the nine months ended September 30, 2004 was $784,000 compared to $1.3 million for the nine months ended September 30, 2003. The decrease of $518,000 was mainly the result of an increase in noninterest expense of $830,000, primarily resulting from merger-related expenses and increases in salaries and employee benefits, partially offset by a $301,000 increase in net interest income.

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     Net Interest Income. Net interest income increased $301,000, or 6.1%, to $5.3 million for the first nine months of 2004 compared to $5.0 million for the first nine months of 2003. The increase was primarily due to higher average loans and a lower cost of funds, partially offset by lower asset yields.

     Interest Income. Total interest and dividend income increased $385,000, or 5.1%, to $8.0 million for the first nine months of 2004 from $7.6 million for the first nine months of 2003. Interest income on loans increased $478,000, or 7.1%, to $7.2 million for the nine months ended September 30, 2004 compared to $6.7 million for the nine months ended September 30, 2003. The increase was due a $27.3 million increase in the average balance of net loans outstanding partially offset by an 81 basis point decrease in the average yield on loans. The increase in loan volume and the decrease in yield were mainly due to a lower interest rate environment, additional originations primarily resulting from prepayments and refinancing activity in a low interest rate environment and the purchase of $14.0 million of residential mortgage loans from another institution during the first nine months of 2004 compared to the first nine months of 2003. Interest and dividend income from investment securities, short-term investments and other investments decreased $93,000, or 10.6%, to $781,000 for the nine months ended September 30, 2004, compared to $874,000 for the nine months ended September 30, 2003. The decrease in income was due to a 74 basis point decrease in the average yield on these investments partially offset by a $6.4 million increase in the average balance of these investments outstanding. The lower yields on these investments resulted from a lower interest rate environment during the first nine months of 2004 compared to the first nine months of 2003.

     Interest Expense. Interest expense increased $84,000, or 3.2%, to $2.7 million for the nine months ended September 30, 2004 compared to $2.6 million for the nine months ended September 30, 2003. The increase was primarily due to an increase in interest-bearing liabilities of $29.7 million, or 18.9%, to $186.8 million for the nine months ended September 30, 2004 from $157.1 million for the nine months ended September 30, 2003 partially offset by a decrease in the average cost of funds for interest-bearing liabilities of 30 basis points. The average cost of interest-bearing liabilities for the first nine months of 2004 was 1.95% as compared to 2.25% for the first nine months of 2003. The decrease in the average cost of interest-bearing liabilities was primarily due to a lower interest rate environment. The higher average balance of interest-bearing liabilities for the first nine months of 2004 primarily resulted from a $12.9 million increase in the average balance of certificates of deposit, a $8.7 million increase in the average balances in money market/NOW accounts and a $10.9 million increase in the average balance of Federal Home Loan Bank of Boston advances, partially offset by a $2.7 million decrease in savings deposits.

     Provision for Loan Losses. The provision for loan losses was $90,000 for the nine months ended September 30, 2004 and $90,000 for the nine months ended September 30, 2003.

     Noninterest Income. Noninterest income was $1.9 million for the nine months ended September 30, 2004 as compared to $2.0 million for the nine months ended September 30, 2003, a decrease of $132,000, or 6.4%. The decrease in noninterest income was due to a decrease in loan referral fees of $126,000 as more loans originated by Chart Bank were for its own portfolio, a decrease in customer service fees of $89,000 due to a reduction in service fees on deposit accounts that was instituted in the fourth quarter of 2003, partially offset by increases in revenues from net gain on sales and redemptions of securities of $47,000, ATM service contract fees of $24,000 and miscellaneous income of $12,000.

     Noninterest Expense. Noninterest expense increased $830,000, or 17.3%, from $4.8 million for the nine months ended September 30, 2003 to $5.6 million for the nine months ended September 30, 2004. The increase in noninterest expense from the prior year period was primarily due to merger-related expenses of $382,000 and increases in expense relating to salaries and employee benefits of $345,000,

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data processing of $90,000 due to added volume and new services offered, advertising and marketing expenses of $81,000 and legal fees of $38,000, partially offset by decreases in telephone costs of $34,000, exam and audit related costs of $9,000, stationary and supplies costs of $25,000, and occupancy and equipment expenses of $31,000 as certain assets became fully depreciated.

     Provision for Income Taxes. The provision for income taxes decreased $263,000 from $823,000 for the first nine months of 2003 to $680,000 for the nine months ended September 30, 2004. The effective tax rate for the nine months ended September 30, 2004 increased to 46.4% from 38.7% in the prior year period, primarily due to merger-related expenses that are not deductible for tax purposes.

Comparison of Chart Bank’s Financial Condition at December 31, 2003 and 2002

     General. Chart Bank’s total assets increased $6.9 million, or 3.3%, to $209.9 million at December 31, 2003 as compared to $203.0 million at December 31, 2002. The increase was primarily due to a $16.9 million increase in net loans, partially offset by a $9.9 million decrease in cash and cash equivalents. The growth in assets was primarily funded by an increase in deposits of $5.5 million and advances from the Federal Home Loan Bank of Boston of $944,000.

     Net Loans. Net loans increased $16.9 million, or 13.8%, to $123.0 million at December 31, 2002 to $139.9 million at December 31, 2003, primarily as a result of increased commercial mortgage loans, residential mortgage loans and construction loans. Commercial mortgage loans increased $8.2 million, or 9.8%, from $83.6 million at December 31, 2002 to $91.8 million at December 31, 2003, primarily as a result of additional originations of commercial mortgage loans. Residential mortgage loans increased $3.9 million, or 11.7%, from $33.7 million at December 31, 2002 to $37.7 million at December 31, 2003, primarily as a result of additional originations of residential mortgage loans. Construction loans increased $3.2 million, or 95.3%, from $3.3 million at December 31, 2002 to $6.5 million at December 31, 2003, primarily as a result of additional originations of construction loans.

     Securities. Available for sale securities decreased by $11.1 million, or 67.3%, from a fair value of $16.5 million at December 31, 2002 to a fair value of $5.4 million at December 31, 2003. Held to maturity securities increased $10.9 million, or 84.0%, from an amortized cost of $13.0 million at December 31, 2002 to $24.0 million at December 31, 2003. The decrease in available for sale securities and the increase in held to maturity securities primarily resulted from the reinvestment of proceeds from maturities, calls and sales of available for sale securities and held to maturity securities in held to maturity securities.

     Cash and Cash Equivalents. Cash and cash equivalents decreased $9.9 million, or 22.1%, from $44.8 million at December 31, 2002 to $34.9 million at December 31, 2003, primarily as a result of a $9.1 million decrease in short-term investments and a $781,000 decrease in cash and due from banks primarily resulting from fluctuations in the ordinary course of business. The decrease in cash and cash equivalents was mainly due to the deployment of cash and cash equivalents in loans. Cash deployed in ATMs by CSSI increased from $26.7 million at December 31, 2002 to $27.0 million at December 31, 2004.

     Deposits and Borrowed Funds. Deposits totaled $175.8 million at December 31, 2003, an increase of $5.5 million, or 3.1%, compared to $170.3 million at December 31, 2002. The deposit growth reflects an increase in nonmaturity deposits partially offset by a decrease in certificates of deposit. Nonmaturity deposits (savings, money market, NOW and demand deposit accounts) increased $6.6 million, while certificates of deposit decreased $1.1 million. Chart Bank shifted its marketing focus during 2003 to obtain nonmaturity deposit accounts to take advantage of their lower cost of funds when compared to certificates of deposit. Advances from the Federal Home Loan Bank of Boston increased

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$944,000, or 5.9%, to $15.9 million at December 31, 2003 from $15.0 million at December 31, 2002. These funds were primarily used to fund loan growth.

     Non-Performing Assets, Delinquencies and Allowance for Loan Losses. Non-performing assets, all of which consisted of loans, totaled $213,000 at December 31, 2003, compared to $25,000 at December 31, 2002, representing an increase of $188,000. The increase in non-performing assets was an increase in non-performing residential mortgage loans of $120,000 and an increase in non-performing commercial mortgage loans of $68,000.

     The allowance for loan losses was $1.7 million at December 31, 2003, an increase of $121,000 from the $1.5 million recorded at December 31, 2002. The allowance for loan losses as a percentage of gross loans was 1.17% at December 31, 2003 as compared to 1.23% at December 31, 2002. The allowance for loan losses as a percentage of non-performing loans was 778% at December 31, 2003 as compared to 6,144% at December 31, 2002. The amount of the unallocated allowance, which is not allocated to any specific segment of the loan portfolio, was $79,000 December 31, 2003 as compared to $219,000 at December 31, 2002. The allowance is an estimate, and ultimate losses may vary from current estimates. See “—Critical Accounting Policies—Allowance for Loan Losses” on page [#] for a discussion of the factors considered in making this estimate and the risks associated and the risks associated with using those factors.

     Stockholders’ Equity. Total stockholders’ equity increased $1.3 million, or 8.3%, to $17.4 million at December 31, 2003, compared to $16.1 million at December 31, 2002. The increase was primarily due to net income of $1.7 million during the year ended December 31, 2003, partially offset by dividends paid to stockholders during 2003 of $213,000 and the reduction of accumulated other comprehensive income of $151,000. The decrease in accumulated other comprehensive income was due to a reduction in the unrealized gain on securities available for sale, net of taxes of $151,000. The decline in the unrealized gains was primarily due to a higher interest rate environment reducing the fair value of Chart Bank’s fixed income portfolio.

Comparison of Chart Bank’s Operating Results for the Years Ended December 31, 2003 and 2002

     Net Income. Net income for the year ended December 31, 2003 was $1.7 million compared to net income of $1.6 million for the prior year. The increase of $133,000 was mainly the result of a decrease in noninterest expense of $784,000, partially offset by a decrease in noninterest income of $605,000, both of which primarily related to the partial discontinuation of the residential loan referral program.

     Net Interest Income. Net interest income remained consistent at $6.6 million for 2003 from 2002. Net interest income increased as a result of higher interest income from an increase in the level of average interest earning assets, but was offset by lower yields and higher interest expense resulting from an increase in the level of average interest bearing liabilities.

     Interest Income. Total interest and dividend income decreased $942,000, or 8.5%, to $10.1 million for 2003 from $11.0 million for 2002. Interest income on loans decreased $602,000, or 6.3%, to $9.0 million in 2003 from $9.6 million in 2002. The decrease was due to a 70 basis point decrease in the average yield on loans, partially offset by a $4.2 million increase in the average balance of net loans outstanding. The decrease in yield and increase in loan volume was due to a lower interest rate environment and higher prepayments and refinancing of residential and commercial mortgage loans in 2003 compared to 2002. Interest and dividend income from investment securities, short-term investments and other investments decreased $340,000, or 23.3%, to $1.1 million in 2003 from $1.5 million in 2002. The decrease was due to a 114 basis point decrease in the average yield on these investments, partially

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offset by a $2.1 million increase in the average balance of these investments outstanding. The lower yields on these investments resulted from a lower interest rate environment in 2003 compared to 2002.

     Interest Expense. Interest expense decreased $1.0 million, or 22.7%, to $3.5 million for 2003 from $4.5 million for 2002. The decrease was primarily due to a decrease in the average cost of funds for interest-bearing liabilities of 77 basis points, partially offset by an increase in the average balance of interest-bearing liabilities of $7.0 million, or 4.6%, to $158.2 million in 2003 from $151.2 million in 2002. The average cost of interest-bearing liabilities for 2003 was 2.18% as compared to 2.95% for 2002. The decrease in the average interest-bearing liabilities was primarily due to a lower interest rate environment. The higher average balance of interest-bearing liabilities in 2003 primarily resulted from an $8.1 million increase in the average balances in money market/NOW accounts and a $2.4 million increase in savings deposits, partially offset by a $3.4 million decrease in the average balance of Federal Home Loan Bank of Boston advances.

     Provision for Loan Losses. The provision for loan losses was $120,000 for 2003 and 2002.

     Noninterest Income. Noninterest income decreased $605,000, or 18.5%, to $2.7 million for 2003 as compared to $3.3 million for 2002. The decrease in noninterest income was due to the decrease in loan referral fees of $589,000 due to the partial discontinuation of the residential loan referral program due to lack profitability, gain on the sale of the Hyannis banking office of $316,000 in 2002, which did not recur in 2003, the decrease in gains from sales and redemptions of securities of $79,000, partially offset by increases in revenues from ATM service contracts of $318,000 and customer service fees of $102,000 and $41,000 in miscellaneous income due to a legal settlement.

     Noninterest Expense. Noninterest expense decreased $784,000, or 10.9%, to $6.4 million for 2003 from $7.2 million for 2002. The decrease in noninterest expense for 2003 was primarily due to decreases in expenses relating to salaries and employee benefits of $432,000 due to the partial discontinuation of the residential loan referral program, and reductions in advertising and marketing of $129,000, data processing of $85,000, professional services of $46,000 and other general and administrative of $91,000.

     Provision for Income Taxes. The provision for income taxes increased $118,000, or 12.3%, to $1.1 million for 2003 from $958,000 in for 2002. The effective tax rates were 38.7% for 2003 and 37.9% for 2002.

     Average Balances, Interest And Average Yields/Cost. The following table presents certain information for the periods indicated regarding average balances of assets and liabilities, as well as the total dollar amounts of interest income from average interest-earning assets and interest expense on average interest-bearing liabilities and the resulting average yields and costs. The yields and costs for the periods indicated are derived by dividing income or expense by the average balances of assets or liabilities, respectively, for the periods presented.

     Average balances were derived from average daily balances. The yields and rates include fees which are considered adjustments to yields.

     The following tables set forth average balance sheets, average yields and costs, and certain other information for the periods indicated. No tax-equivalent yield adjustments were made, as the effect thereof was not material. All average balances are daily average balances. Non-accrual loans were included in the computation of average balances, but have been reflected in the table as loans carrying a zero yield. The yields set forth below include the effect of deferred fees, discounts and premiums that are amortized or accreted to interest income or expense.

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                    Nine Months Ended September 30,
    At September 30, 2004
   2004
   2003
                    Average                   Average        
    Outstanding   Yield/   Outstanding                   Outstanding        
    Balance
   Rate
   Balance
   Interest
   Yield/Rate(1)
   Balance
   Interest
   Yield/Rate(1)
    (Dollars in thousands)
Interest-earning assets:
                                                                
Loans, net
   $ 175,572       6.07 %   $ 156,122     $ 7,225       6.17 %   $ 128,862     $ 6,747       6.98 %
Investment securities
     40,658       2.65       43,467       781       2.40       37,107       874       3.14  
 
    
 		              
 		      
 		              
 		      
 		          
Total interest-earning assets
     216,230       5.43       199,589       8,006       5.35       165,969       7,621       6.12  
 
                            
 		                      
 		          
Non-interest-earning assets
     40,031               35,860                       36,640                  
 
    
 		              
 		                      
 		                  
Total assets
   $ 256,261             $ 235,449                     $ 202,609                  
 
    
 		              
 		                      
 		                  
Interest-bearing liabilities:
                                                                
Savings deposits
   $ 14,630       0.77     $ 17,521       105       0.80     $ 20,215       148       0.98  
Money market/NOW accounts
     75,649       1.42       68,349       722       1.41       59,694       618       1.38  
Certificates of deposit
     92,488       2.63       77,982       1,504       2.57       65,128       1,566       3.21  
 
    
 		              
 		      
 		              
 		      
 		          
Total deposits
     182,767       1.98       163,852       2,331       1.90       145,037       2,332       2.14  
FHLB advances
     22,000       2.52       22,913       401       2.33       12,051       316       3.50  
 
    
 		              
 		      
 		              
 		      
 		          
Total interest-bearing liabilities
     204,767       2.04       186,765       2,732       1.95       157,088       2,648       2.25  
 
                            
 		                      
 		          
Non-interest-bearing liabilities
     33,948               31,106                       29,153                  
 
    
 		              
 		                      
 		                  
Total liabilities
     238,715               217,871                       186,241                  
Stockholders’ equity
     17,546               17,578                       16,368                  
 
    
 		              
 		                      
 		                  
Total liabilities and stockholders’ equity
   $ 256,261             $ 235,449                     $ 202,609                  
 
    
 		              
 		                      
 		                  
Net interest income
                           $ 5,274                     $ 4,973          
 
                            
 		                      
 		          
Net interest rate
spread (2)(5)
             3.39 %                     3.40 %                     3.87 %
Net interest-earning
    assets (3)		   $ 11,046             $ 12,824                     $ 8,881                  
 
    
 		              
 		                      
 		                  
Net interest margin (4)
                                     3.52 %                     4.00 %
Average interest-earning assets to interest-bearing liabilities
                                     106.87 %                     105.65 %
(footnotes on following page)
                                                                

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    Years Ended December 31,
    2003
   2002
    Average                   Average            
    Outstanding           Yield/   Outstanding           Yield/
    Balance
   Interest
   Rate
   Balance
   Interest
   Rate
    (Dollars in thousands)
Interest-earning assets:
                                                
Loans
   $ 130,425     $ 8,971       6.88 %   $ 126,264     $ 9,573       7.58 %
Investment securities
     37,416       1,120       2.99       35,365       1,460       4.13  
 
    
 		      
 		              
 		      
 		          
Total interest-earning assets
     167,841       10,091       6.01       161,629       11,033       6.83  
 
            
 		                      
 		          
Non-interest-earning assets
     36,517                       31,792                  
 
    
 		                      
 		                  
Total assets
   $ 204,358                     $ 193,421                  
 
    
 		                      
 		                  
Interest-bearing liabilities:
                                                
Savings deposits
   $ 20,643       194       0.94     $ 18,244       310       1.70  
Money market/NOW accounts
     60,408       828       1.37       52,280       1,079       2.06  
Certificates of deposit
     64,672       1,992       3.08       64,734       2,520       3.89  
 
    
 		      
 		              
 		      
 		          
Total deposits
     145,723       3,014       2.07       135,258       3,909       2.89  
FHLB advances
     12,491       438       3.51       15,932       557       3.50  
 
    
 		      
 		              
 		      
 		          
Total interest-bearing liabilities
     158,214       3,452       2.18       151,190       4,466       2.95  
 
            
 		                      
 		          
Non-interest-bearing liabilities
     29,592                       27,013                  
 
    
 		                      
 		                  
Total liabilities
     187,806                       178,203                  
Stockholders’ equity
     16,552                       15,218                  
 
    
 		                      
 		                  
Total liabilities and stockholders’ equity
   $ 204,358                     $ 193,421                  
 
    
 		                      
 		                  
Net interest income
           $ 6,639                     $ 6,567          
 
            
 		                      
 		          
Net interest rate spread (5)
                     3.83 %                     3.88 %
Net interest-earning assets (3)
   $ 9,627                     $ 10,439                  
 
    
 		                      
 		                  
Net interest margin (4)
                     3.96 %                     4.06 %
Average of interest-earning assets to interest-bearing liabilities
                     106.08 %                     106.90 %

(1)   Yields and rates for the nine months ended September 30, 2004 and 2003 are annualized.
 
(2)   Net interest rate spread represents the difference between the yield on interest-earning assets and the cost of interest-bearing liabilities at September 30, 2004.
 
(3)   Net interest-earning assets represents total interest-earning assets less total interest-bearing liabilities.
 
(4)   Net interest margin represents net interest income divided by average total interest-earning assets.
 
(5)   Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities for the nine months ended September 30, 2004 and 2003 and the years ended December 31, 2003, 2002 and 2001.

Liquidity and Capital Resources

     Liquidity is the ability to meet current and future financial obligations of a short-term nature. Chart Bank further defines liquidity as the ability to respond to the needs of depositors and borrowers as well as maintaining the flexibility to take advantage of investment opportunities. Primary sources of funds consist of deposit inflows, loan repayments, maturities, pay downs, and sales of mortgage obligations and investments and advances from the Federal Home Loan Bank of Boston. While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit outflows and mortgage prepayments are greatly influenced by general interest rates, economic conditions and competition.

     Chart Bank’s primary investing activities are: (1) originating and purchasing commercial mortgage loans, residential mortgage loans, construction loans, commercial business loans and consumer loans (2) investing in federal agency obligations and corporate equity securities and (3) funding cash in ATMs for Chart Bank’s subsidiary CSSI. These activities are funded primarily by principal and interest

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payments on loans, deposit growth, Federal Home Loan Bank of Boston advances and maturities of securities.

     During the nine months ended September 30, 2004, Chart Bank’s loan originations and purchases, net of repayments, totaled $35.4 million, including the purchase of $14.0 million in residential mortgage loans from another institution. For the nine months ended September 30, 2004, Chart Bank purchased federal agency obligations and corporate equity securities totaling $15.7 million and had proceeds from maturities and sales of securities of $9.5 million. Chart Bank experienced a net increase in total deposits of $40.2 million for the nine months ended September 30, 2004. Deposit flows are affected by the overall level of interest rates, the interest rates and products offered by Chart Bank and its local competitors and other factors. Net Federal Home Loan Bank of Boston advances for the nine months ended September 30, 2004 were $6.1 million.

     During the years ended December 31, 2003 and 2002, Chart Bank’s loan originations, net of repayments totaled $17.0 million and a decline of $3.0 million, respectively. For the years ended December 31, 2003 and 2002, Chart Bank purchased federal agency obligations totaling $23.1 million and $24.6 million, respectively, and had proceeds from maturities, calls and sales of securities of $22.9 million and $16.5 million, respectively. Chart Bank experienced a net increase in total deposits of $5.5 million and $24.7 million for the years ended December 31, 2003 and 2002, respectively. Deposit flows are affected by the overall level of interest rates, the interest rates and products offered by Chart Bank and its local competitors and other factors. Net Federal Home Loan Bank of Boston advances for the years ended December 31, 2003 and 2002 were $944,000 and a reduction of $4.7 million, respectively

     Chart Bank closely monitors its liquidity position on a daily basis. If Chart Bank should require funds beyond its ability to generate them internally, additional sources of funds are available through Federal Home Loan Bank of Boston advances and through a borrowing agreement with the Federal Reserve Bank of Boston at an interest rate that adjusts daily.

     Outstanding commitments for all loans and unadvanced construction loans and lines-of-credit totaled $31.7 million and $27.6 million at September 30, 2004 and December 31, 2003, respectively. Management of Chart Bank anticipates that it will have sufficient funds available to meet its current loan commitments. Certificates of deposit that are scheduled to mature in one year or less from September 30, 2004 totaled $17.4 million and from December 31, 2003 totaled $20.6 million. Chart Bank relies primarily on competitive rates, customer service, and long-standing relationships with customers to retain deposits. Occasionally, Chart Bank will also offer special competitive promotions to its customers to increase retention and promote deposit growth. Based upon Chart Bank’s historical experience with deposit retention, management believes that a significant portion of its deposits will remain with Chart Bank.

     Chart Bank must satisfy various regulatory capital requirements administered by the federal banking agencies including a risk-based capital measure. The risk-based capital guidelines include both a definition of capital and a framework for calculating risk-weighted assets by assigning balance sheet assets and off-balance sheet items to broad risk categories.

     At September 30, 2004, Chart Bank exceeded all of its regulatory capital requirements with a leverage capital level of $17.5 million, or 6.8% of average assets, which is above the required level of $10.4 million, or 4.0%, and total risk-based capital of $19.4 million, or 12.0% of risk weighted assets, which is above the required level of $12.9 million, or 8.0%. Chart Bank is considered “well capitalized” under regulatory guidelines.

     At December 31, 2003, Chart Bank exceeded all of its regulatory capital requirements with a leverage capital level of $17.3 million, or 8.4% of average quarterly assets, which was above the required

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level of $8.3 million, or 4.0%, and total risk-based capital of $19.0 million, or 12.4% of risk weighted assets, which is above the required level of $12.3 million, or 8.0%. At December 31, 2003, Chart Bank was considered “well capitalized” under regulatory guidelines.

     The following table summarizes our principal contractual obligations as of September 30, 2004 and the effects such obligations are expected to have on our liquidity and cash flows in future periods.

                                         
    Payments Due by Period
            Less than 1                   More than 5
    Total
   Year
   1-3 Years
   3-5 Years
   Years
    (in thousands)
Contractual Obligations:
                                        
FHLBB borrowings
   $ 22,000     $ 17,000     $ 2,000     $ 3,000     $ —  
Operating lease obligations
     571       227       275       69       —  
Data processing contracts
     1,250       480       770       —       —  
     
     
     
     
     
 
Total
   $ 23,821     $ 17,707     $ 3,045     $ 3,069     $ —  
     
     
     
     
     
 

Off-Balance Sheet Information

     Chart Bank is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments included commitments to extend credit of approximately $31.7 million, $27.6 million and $14.6 million as of September 30, 2004, December 31, 2003 and 2002, respectively, and standby letters of credit of approximately $618,000, $542,000 and $232,000 as of September 30, 2004, December 31, 2003 and 2002, respectively. Management of Chart Bank anticipates that it will have sufficient funds available to meet its current loan commitments.

     These consolidated financial instruments involve, to varying degrees, elements of credit and interest rate risk. Chart Bank’s exposure to credit loss in the event of non-performance by the other party to the financial instrument is represented by the contractual amount of those instruments. Chart Bank uses the same credit policies in making commitments as it does for existing loans. Management believes that Chart Bank controls the credit risk of these financial instruments through credit approvals, lending limits, monitoring procedures and the receipt of collateral when deemed necessary.

     Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments could expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. Chart Bank’s management evaluates each customer’s credit worthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by Chart Bank, upon extension of credit, is based on management’s credit evaluation of the customer. Collateral held varies but may include income producing commercial properties, accounts receivable, inventory and property, plant and equipment.

     Standby letters of credit are conditional commitments issued by Chart Bank to guarantee the performance of a customer to a third party. The credit risk involved in issuing letters of credit is essentially the same as that involved in existing loan facilities to customers. Chart Bank holds real estate and marketable securities as collateral supporting those commitments for which collateral is deemed necessary.

Impact of Inflation and Changing Prices

     The consolidated financial statements of Chart Bank and related data presented in this document have been prepared in conformity with accounting principles generally accepted in the United States of

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America, which require the measurement of financial position and operating results in terms of historical dollars, without considering changes in the relative purchasing power of money over time due to inflation. Unlike many industrial companies, substantially all of the assets and liabilities of Chart Bank are monetary in nature. As a result, interest rates have a more significant impact on Chart Bank’s performance than the general level of inflation. Over short periods of time, interest rates may not necessarily move in the same direction or in the same magnitude as inflation.

Impact of New Accounting Standards

     On June 30, 2004, the Financial Accounting Standards Board (“FASB”) published an Exposure Draft, “Share-Based Payment,” an amendment of Statement of Financial Accounting Standards (“SFAS”) Nos. 123 and 95 (the “Exposure Draft”). The Exposure Draft is proposing, among other things, amendments to SFAS No. 123 and thus, the manner in which share-based compensation, such as stock options, will be accounted for by both public and non-public companies. The Exposure Draft allows nonpublic entities, such as Chart Bank, to elect to measure compensation cost of awards of equity share options and similar instruments at intrinsic value through the date of settlement and therefore, is not expected to have a material impact on Chart Bank’s consolidated financial statements.

     On September 30, 2004, the FASB issued FASB Staff Position (“FSP”) Emerging Issues Task Force (“EITF”) Issue No. 03-1-1 delaying the effective date of paragraphs 10-20 of EITF 03-1, “The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments”, which provides guidance for determining the meaning of “other-than-temporarily impaired” and its application to certain debt and equity securities within the scope of SFAS No. 115, “Accounting for Certain Investments in Debt and Equity Securities”, and investments accounted for under the cost method. The guidance requires that investments which have declined in value due to credit concerns or solely due to changes in interest rates must be recorded as other-than-temporarily impaired unless the Bank can assert and demonstrate its intention to hold the security for a period of time sufficient to allow for a recovery of fair value up to or beyond the cost of the investment which might mean maturity. The delay of the effective date of EITF 03-1 will be superceded concurrent with the final issuance of proposed FSP Issue 03-1-a. Proposed FSP Issue 03-1-a is intended to provide implementation guidance with respect to all securities analyzed for impairment under paragraphs 10-20 of EITF 03-1. Management continues to closely monitor and evaluate how the provisions of EITF 03-1 and proposed FSP Issue 03-1-a will affect Chart Bank.

Quantitative and Qualitative Disclosures About Market Risk

     Chart Bank’s most significant form of market risk is interest rate risk. The principal objectives of Chart Bank’s interest rate risk management are to evaluate the interest rate risk inherent in certain balance sheet accounts, determine the level of risk appropriate given its business strategy, operating environment, capital and liquidity requirements and performance objectives, and manage the risk consistent with its established policies. Chart Bank has an Asset/Liability Committee, responsible for reviewing its asset/liability policies and interest rate risk position, which meets quarterly and reports trends and interest rate risk position to the Finance Committee of the Board of Directors and the Board of Directors quarterly. The extent of the movement of interest rates is an uncertainty that could have a negative impact on the earnings of Chart Bank. Chart Bank manages interest rate risk by:

(1)   Maintaining a high quality securities portfolio that provides adequate liquidity and flexibility to take advantage of opportunities that may arise from fluctuations in market interest rates, the overall maturity and duration of which is monitored in relation to the repricing of its loan portfolio;
 
(2)   Promoting lower cost liability accounts such as demand deposits savings and money market

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    deposits; and
 
(3)   Using advances from the Federal Home Loan Bank of Boston to better structure maturities of its interest rate sensitive liabilities.

     Chart Bank’s investment policy authorizes it to be a party to financial instruments with off-balance sheet risk in the normal course of business to reduce its exposure to fluctuations in interest rates. All counter-parties must be pre-approved by Chart Bank’s Executive Committee and reported to its Finance Committee.

Quantitative Aspects Of Market Risk

     Chart Bank analyzes its interest rate sensitivity position to manage the risk associated with interest rate movements through the use of balance sheet simulation and gap analyses. The matching of assets and liabilities may be analyzed by examining the extent to which such assets and liabilities are “interest rate sensitive.” An asset or liability is said to be interest rate sensitive within a specific time period if it will mature or reprice within that time period.

     Chart Bank’s goal is to manage asset and liability positions so as to moderate the effects of interest rate fluctuations on net interest income. Balance sheet simulations are completed quarterly and presented to the Board of Directors. The simulations provide an estimate of the impact of changes in interest rates on net interest income under a range of assumptions. The numerous assumptions used in the simulation process are what Chart Bank’s management believes to be the most appropriate assumptions about customer and competitor behavior in the specified interest rate scenario and are reviewed by its Asset/Liability Committee on a quarterly basis. In performing the simulations, Chart Bank assumes that there is no overall growth, decline or change in the mix of its interest-bearing assets and liabilities during the period measured. Simulation analysis may have certain limitations caused by market conditions varying from those assumed in a model. Actual results can often differ due to the effects of prepayments and refinancings of loans and investments, as well as the repricing or runoff of deposits, which may be different from that which has been assumed. Changes to these assumptions can significantly affect the results of the balance sheet simulation.

     Chart Bank’s current limits on interest-rate risk specify that if interest rates were to ramp up a total of 100, 200 or 300 basis points or down a total of 100 basis points over a twelve month period beginning October 1, 2004 as a result of equal monthly increases or decreases, estimated net interest income for the two-year period beginning October 1, 2004 should not increase or decrease by greater than 5% per year. The results of these simulations are shown below:

                 
    Calculated increase (decrease) in projected
    net interest income for the year ending
    September 30,
    2005
   2006
Changes in interest rates:
                
+300 bps
     1.15 %     3.91 %
+200 bps
     1.24       3.58  
+100 bps
     0.62       1.65  
-100 bps
     -1.00       -3.65  
Policy Limit
     +/-5.00 %     +/-5.00 %

     As noted above, one of the tools used to measure rate sensitivity is the funds gap. The funds gap is defined as the amount by which a bank’s rate sensitive assets exceed its rate sensitive liabilities. A positive gap exists when rate sensitive assets exceed rate sensitive liabilities. This indicates that a greater volume of assets than liabilities will reprice during a given period. This mismatch will improve earnings in a rising rate environment and inhibit earnings when rates decline. Conversely, when rate sensitive

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     liabilities exceed rate sensitive assets, the gap is referred to as negative and indicates that a greater volume of liabilities than assets will reprice during the period. In this case, a rising rate environment will inhibit earnings and declining rates will improve earnings. Notwithstanding this general description of the effect on income of the gap position, it may not be an accurate predictor of changes in net interest income.

     The following table shows the amounts of interest-earning assets and interest-bearing liabilities at September 30, 2004 that reprice during the periods indicated:

                                         
    Repricing or Maturity Date
            Over Six   Over One        
    One Day to   Months to   Year to Five   Over Five    
    Six Months
   One Year
   Years
   Years
   Total
            (Dollars in thousands)        
Interest earning assets:
                                        
Loans(1)
   $ 43,844     $ 15,519     $ 107,300     $ 10,217     $ 176,880  
Investment securities
     10,815       3,204       26,619       20       40,658  
     
     
     
     
     
 
Total interest-earning assets
     54,659       18,723       133,919       10,237       217,538  
     
     
     
     
     
 
Interest bearing liabilities:
                                        
Deposits – non-certificates(2)
     63,757       —       —       26,522       90,279  
– certificates
     20,506       49,395       22,587       —       92,488  
Borrowings
     13,000       4,000       5,000       —       22,000  
     
     
     
     
     
 
Total interest-bearing liabilities
     97,263       53,395       27,587       26,522       204,767  
     
     
     
     
     
 
Net interest rate sensitivity gap
   $ (42,604 )   $ (34,672 )   $ 106,332     $ (16,285 )   $ 12,771  
     
     
     
     
     
 
Cumulative interest rate sensitivity gap
   $ (42,604 )   $ (77,276 )   $ 29,056     $ 12,771          
     
     
     
     
         

(1)   Excludes the allowance for loan losses and net deferred loan costs.
 
(2)   Regular savings and NOW accounts have been included in the over five year timeframe; money market accounts have primarily been included in the one day to six months category.

THE ACQUISITION OF CHART BANK

     We decided to undertake the conversion in connection with our decision to enter into an Agreement and Plan of Merger with Chart Bank dated September 1, 2004. Based on September 30, 2004 unaudited financials for Benjamin Franklin Bancorp and Chart Bank at the minimum of the valuation range, the combined entity would have on a pro forma basis total assets of $815.9 million, total deposits of $6l6.2 million, and net loans of $551.4 million. For pro forma income statements and balance sheets, see “Pro Forma Data” on page [#]. For historical financial information about Chart Bank, see “Selected Consolidated Financial Information of Chart Bank” on page [#] and the Consolidated Financial Statements of Chart Bank, A Cooperative Bank and Subsidiaries on page [#].

Background and Reasons for the Acquisition.

     We believe that the acquisition of Chart Bank furthers our expansion strategy, including geographic market area, customer base and asset size, while maintaining our loan portfolio quality and relatively low cost of funds. Although it is a cooperative bank, Chart Bank has a significant amount of commercial loans, which furthers our goal of increasing such loans. We believe that our current product offerings and corporate culture will blend well with that of Chart Bank, which will facilitate the integration of the two companies after the acquisition.

     Over the past few years, our Board has come to the conclusion that we need to grow Benjamin Franklin Bank in order to have the scale to effectively compete with the larger institutions in our market

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and to continue to be a meaningful provider of financial services to our communities. In a series of special meetings to consider various growth strategies, the Board met with outside consultants who assisted the Board in analyzing its strategic alternatives. Among the alternatives considered was the possible merger with another mutual institution, but such transactions are difficult to initiate. The Board recognizes that our ability to grow by internal expansion has been hampered somewhat by our capital level; as a mutual institution, our primary means of increasing our capital is through retaining our earnings, and earnings take time to generate. The Board determined that it was willing to consider a mutual to stock conversion or minority stock issuance if necessary to facilitate an expansion opportunity.

     In June 2004, Chart Bank’s investment advisor, Ryan Beck & Co., Inc., contacted Thomas R. Venables, our President and Chief Executive Officer, and asked him if Benjamin Franklin Bancorp would be interested in exploring a strategic transaction with Chart Bank. Mr. Venables met with Richard E. Bolton, Jr., Chart Bank’s President and Chief Executive Officer, and the parties signed a confidentiality agreement pursuant to which Chart Bank provided Mr. Venables with preliminary information regarding Chart Bank to enable him to assess whether Benjamin Franklin Bancorp would be interested in pursuing a transaction with Chart Bank.

     Mr. Venables met with the Benjamin Franklin Bancorp Board on July 8, 2004, and discussed the possible transaction with Chart Bank, including the necessity to undergo a full conversion to a public company in order to effect the transaction. After a lengthy discussion, the Board authorized Mr. Venables to move to the next stage of the process. On July 13, the Board held another special meeting at which the Board authorized the engagement of McConnell Budd & Romano, investment advisors, and Foley Hoag LLP, legal counsel, to assist in formulating a proposal to acquire Chart Bank and in negotiating the terms of a possible transaction. Representatives of both McConnell Budd & Romano and Foley Hoag LLP were present at that meeting and engaged in a detailed discussion of the process that a transaction with Chart Bank would follow.

     Over the next three weeks, Mr. Venables and his team of advisors worked to formulate a financial proposal for the possible acquisition of Chart Bank. During this period, Mr. Venables also hired as Chief Financial Officer Claire Bean, who had worked with him as chief financial officer at two prior banks. On July 28, 2004, the Benjamin Franklin Bancorp Board met again with representatives of McConnell Budd & Romano and Foley Hoag, as well as with senior management of Benjamin Franklin Bank. After a thorough discussion of the financial analysis presented by McConnell Budd representatives, and a discussion of various strategic alternatives available to the institution, the Board authorized management and representatives of McConnell, Budd & Romano to submit to Chart Bank a non-binding expression of interest in pursuing a transaction and to conduct price negotiations in a range of $30.50 to $31.50, with 55.0% of the consideration to be paid in stock and 45.0% of the consideration to be paid in cash. The transaction would be conditioned on Benjamin Franklin Bancorp’s conversion to stock form.

     Subsequent to the July 28, 2004 Board meeting, management of Benjamin Franklin Bancorp, with the assistance of its legal and financial advisors, engaged in discussions with Chart Bank, and the parties proceeded to draft a letter of intent to form the basis of negotiations of a definitive merger agreement. After several days of negotiations, Benjamin Franklin Bancorp and Chart Bank agreed to some, but not all, of the material terms of a transaction, including a price of $30.75 per share, and executed a non-binding letter of intent on August 11, 2004. Pursuant to the letter of intent, the parties agreed to work together diligently towards execution of a definitive agreement.

     After the parties executed the letter of intent, legal counsel for Benjamin Franklin Bancorp prepared and circulated a draft merger agreement and the parties began negotiations concerning the terms of the merger agreement. Drafts of consulting agreements and payments and waiver agreements with Richard E. Bolton, Sr. and Richard E. Bolton, Jr. and a draft voting agreement to be executed by certain stockholders of Chart Bank, also were prepared and circulated for discussion. On August 21, 2004,

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representatives of Benjamin Franklin Bancorp and Chart Bank conducted more specific financial, business, regulatory and legal due diligence at an off-site location. During the period between August 21 and August 30, 2004, the parties discussed and negotiated various issues, including without limitation, the representations and warranties to be made by Chart Bank, the treatment of Chart Bank’s employees in the transaction, the conduct of the respective parties’ businesses between signing and closing of the transaction, the parties’ respective conditions to closing, the rights of the parties to abandon the transaction, the voting agreements to be entered into by certain stockholders of Chart Bank pursuant to which such stockholders would agree to vote their shares of Chart Bank stock in favor of the transaction, and the consulting and payments and waiver agreements for Mr. Bolton, Sr. and Mr. Bolton, Jr.

     On August 25, 2004, the Board of Trustees of Benjamin Franklin Bancorp met to discuss the status of the merger negotiations and to hear presentations by senior management about their due diligence review of Chart Bank. On August 30, 2004, the Board met again to consider the terms of the merger agreement, the potential advantages and risks associated with the merger and the conversion, and an update of the financial analyses of McConnell Budd & Romano. Following a discussion by the Benjamin Franklin Bancorp Board, McConnell Budd & Romano delivered an oral opinion concerning the fairness, from a financial point of view, of the proposed consideration to be paid to Chart Bank’s stockholders as set forth in the merger agreement, [which opinion was later confirmed in writing.] Following discussion, by the unanimous vote of all of the directors, the Benjamin Franklin Bancorp Board approved and adopted the merger agreement, authorized management to enter into the merger agreement and directed management and legal counsel to move promptly toward preparation of a plan of conversion and other documents related to the conversion. Chart Bank and Benjamin Franklin Bancorp executed the merger agreement and related agreements on September 1, 2004 and the transaction was publicly announced later that same day.

     The acquisition will immediately expand our geographic market toward the more densely populated suburbs closer to Boston and will result in a larger branch network for the benefit of the customers of the combined institution. The market served by Chart Bank is a logical geographic extension of our current market area, and is an area in which our Chief Executive Officer and our Chief Financial Officer have significant banking experience. We currently operate in communities southwest of the city of Boston, and the merger with Chart Bank will extend our market area northeast toward Boston. Over the next several years, we intend to open new banking offices in select towns located between the two market areas, which will further enhance the accessibility and convenience of the organization for our combined customer base.

     Our Board believes that the combination with Chart Bank will enhance the competitive position of the combined entity and will enable the resulting institution to compete more effectively than would the individual institutions alone. We currently compete with a variety of financial institutions, including many that have competitive advantages due to greater financial resources, larger loan limits, larger branch networks and a broader offering of financial services. The combination with Chart Bank will result in a larger company with a larger branch network and greater financial resources that can be utilized to enhance the services we offer. Among the factors considered by our Board were the following:

•   The ability of Benjamin Franklin Bank to establish its physical presence in Middlesex County, which is a contiguous market that offers the opportunity for us to reach new customers and expand our franchise;
 
•   The beneficial impact of the conversion and the Chart Bank acquisition on the depositors, employees, customers and communities served by the two institutions. The conversion and acquisition results in a larger, well-capitalized company that will have greater resources and more locations to serve its depositors, customers and communities. The creation of the charitable foundation will provide additional benefits to the community.

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    As a larger company, we will be better able provide career development opportunities for our employees.
 
•   The difficulty and expense of expanding our presence through de novo branching in contrast to the efficacy of expanding through acquisition;
 
•   Information concerning the pro forma financial condition, results of operations, capital levels, asset quality and prospects of the combined institutions which provided a basis for the board of directors to understand and ultimately approve of the transactions;
 
•   The ability to substantially increase our commercial business and commercial real estate loans, which represent key components of our lending activities;
 
•   The general structure of the transactions and the compatibility of the respective managements and business philosophies that are thought to have beneficial implications with respect to the integration of the companies;
 
•   The ability of the combined enterprise to compete more effectively as described above; and
 
•   General industry and economic conditions that were viewed as favorable with respect to our plans for expansion through acquisition.

     As a result of the acquisition, six members of Chart Bank’s Board of Directors (including Richard E. Bolton Jr., Chart Bank’s Chief Executive Officer) will serve on both the Benjamin Franklin Bancorp and the Benjamin Franklin Bank Boards of Directors.

     We anticipate that when the acquisition is completed, a majority of the employees of Chart Bank will become employees of Benjamin Franklin Bank. Former employees of Chart Bank will be entitled to benefits afforded to our existing employees generally. We will be working to identify operational efficiencies that may be obtained through the consolidation of the entities in the acquisition. It is anticipated that some management and support positions will be eliminated following the acquisition. We have no continuing obligation under the terms of the merger to retain any specific employees of Chart Bank as our employees.

The Chart Bank Merger Agreement

     The following is a brief summary of the significant provisions of the merger agreement between Benjamin Franklin Bancorp and Chart Bank dated as of September 1, 2004. The merger agreement is filed as an exhibit to the registration statement of which this prospectus is a part and is incorporated by reference herein. The merger agreement contains the complete terms of that agreement and this summary is qualified in its entirety by reference to that agreement.

     General; Exchange Ratio. Our merger agreement with Chart Bank provides that Chart Bank will merge into Benjamin Franklin Bank immediately after completion of the conversion of Benjamin Franklin Bancorp into stock form. At the effective time of the merger, each outstanding share of Chart Bank common stock will be converted into the right to receive either $30.75 in cash or 3.075 shares of Benjamin Franklin Bancorp common stock, plus cash in lieu of any fractional share, subject to allocation election procedures. Each Chart Bank option outstanding at the effective time of the merger will be terminated in exchange for a cash payment equal to $30.75, minus the exercise price applicable to the option, multiplied by the number of Chart Bank shares subject to the option. Chart Bank is a closely-held cooperative bank, so its shares are not publicly traded.

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     Chart Bank stockholders will be given the opportunity to elect to receive all cash, all stock or a combination of cash and stock. The election and allocation procedures set forth in the merger agreement will ensure that 55.0% of the shares of Chart Bank common stock will be converted into the right to receive shares of Benjamin Franklin Bancorp common stock and 45.0% of the shares of Chart Bank common stock will be converted into the right to receive cash. Thus, Chart Bank stockholders may not receive exactly the form of consideration that they elect. Instead, they may receive a pro rata amount of cash and Benjamin Franklin Bancorp common stock even if they elect all cash or all stock.

     As of November 30, 2004, there were 1,420,000 shares of Chart Bank common stock and options to purchase 137,000 shares of Chart Bank common stock outstanding. The aggregate consideration for the Chart Bank acquisition will be $22,492,000 in cash and 2,401,575 newly issued shares of Benjamin Franklin Bancorp common stock, assuming that the Chart Bank options are cashed out at the closing rather than being exercised by optionees prior to the closing.

     Conditions to the Merger. The merger agreement provides that completion of the acquisition is subject to the satisfaction or waiver of specified conditions by Benjamin Franklin Bancorp and Chart Bank. The respective obligations of each party under the merger agreement are subject to the fulfillment or waiver of the following conditions at or prior to the completion of the merger:

•   approval of the merger agreement by the stockholders of Chart Bank.
 
•   approval of the merger agreement and the conversion by our corporators.
 
•   receipt of all regulatory approvals required to consummate the conversion and the merger, which approvals do not contain any conditions, restrictions or requirements which our Board reasonably determines in good faith would, individually or in the aggregate, materially reduce the benefits of the conversion and the merger to such a degree that we would not have entered into the merger agreement if the conditions, restrictions or requirements had been known, and expiration of all applicable waiting periods.
 
•   absence of any law, judgment, decree, injunction or other order of any governmental authority prohibiting consummation of the conversion or the merger.
 
•   effectiveness under the Securities Act of 1933 of the registration statements registering the shares of our common stock to be issued in the conversion and the merger and absence of a stop order suspending the effectiveness or proceedings for that purpose initiated by the SEC and not withdrawn.
 
•   authorization for listing on the Nasdaq National Market of the shares of our common stock to be issued in the merger and the conversion, subject to official notice of issuance.
 
•   completion of the conversion, resulting in net proceeds sufficient to enable Benjamin Franklin Bank to remain well-capitalized under applicable federal banking law and otherwise to meet regulatory capital requirements after giving effect to the merger.
 
•   receipt by both parties of an opinion dated as of the effective date of the merger that the merger will constitute a tax-free reorganization described in section 368(a) of the Internal Revenue Code.
 
•   receipt by Benjamin Franklin Bancorp of an opinion dated as of the effective date that the conversion will constitute a tax-free reorganization described in section 368(a) of the Internal Revenue Code.
 
•   the accuracy of the representations and warranties of the other party in all material respects as of September 1, 2004 and as of the closing date (except to the extent that a representation or warranty speaks as of an earlier date), except that any inaccuracies in a party’s

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    representations and warranties shall not prevent that party’s satisfaction of this condition unless the cumulative effect of all inaccuracies, taken together, would be reasonably likely to be material and adverse to the financial condition, results of operation or business of that party, or would materially impair the ability of that party to perform its obligations or would otherwise materially impede the completion of the conversion or the merger, such change or effect being referred to as a “material adverse effect”.
•   performance by the other party in all material respects of all obligations required to be performed by it under the merger agreement.
 
•   no change that individually or in the aggregate has a material adverse effect on the other party, excluding the impact of any (1) changes in banking and similar laws or interpretations of these laws by governmental authorities, (2) changes in generally accepted accounting principles or regulatory accounting requirements, (3) changes in economic conditions affecting financial institutions generally, including changes in general levels of interest rates, (4) direct effects of complying with the merger agreement and (5) the effects of any action or omission otherwise contemplated by the merger agreement or any related document..

     In addition, Benjamin Franklin Bancorp’s obligation to consummate the merger is subject to the fulfillment of each of the following conditions:

•   shares of Chart Bank common stock as to which Chart Bank stockholders have exercised dissenters’ rights represent shall less than 10.0% or more of the outstanding shares of Chart Bank common stock.
 
•   each of Richard E. Bolton, Jr., the President and Chief Executive Officer of Chart Bank, and Richard E. Bolton, Sr., the Chairman of the Board of Directors of Chart Bank shall have entered into, and performed in all material respects, a payments and waiver agreement which, among other things, terminates the officer’s existing employment arrangements with Chart Bank upon the effectiveness of the merger in consideration of specified termination payments.
 
•   all consents of third parties, other than of regulatory authorities, necessary to permit lawful completion of the merger have been obtained, except if the failure to obtain such consents would not individually or in the aggregate have a material adverse effect on Benjamin Franklin Bancorp after giving effect to the conversion and the merger, and none of the consents shall contain any term or condition which would, individually or in the aggregate, have a material adverse effect on Chart Bank or Benjamin Franklin Bancorp.
 
•   Chart Bank shall have not taken any action or made any payment that would result in a parachute payment under section 280G, or in a payment that would be nondeductible under Section 162(m), of the Internal Revenue Code.

     Conduct of Business Prior to the Merger. Each of Chart Bank and Benjamin Franklin Bancorp has each agreed that between the date of the merger agreement and the completion of the merger it will conduct its business in the ordinary course of business. In addition, Chart Bank has agreed that it will

•   continue to operate in the same geographic markets serving the same market segments.
 
•   maintain its current loan, deposit, banking products and service programs on substantially the same terms and conditions.
 
•   use commercially-reasonable efforts to preserve its business organization, keep available the present services of its officers, employees and directors and preserve current relationships and goodwill with customers, suppliers and others.

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     Each of Chart Bank and Benjamin Franklin Bancorp has agreed that, except as otherwise expressly contemplated or permitted by the merger agreement or consented to in writing by the other, it will not do any of the following:

•   take any action that would materially adversely affect or delay its ability to obtain any necessary approvals of any governmental authority for the transactions contemplated by the merger agreement or perform its covenants and agreements under the merger agreement or any related document.
 
•   acquire the assets, business, deposits or properties of any other entity, including through merger or consolidation, , other than in the ordinary course of business or, in the case of Benjamin Franklin Bancorp, as would not be expected to prevent, impede or materially delay the completion of the transactions contemplated by the merger agreement and related documents.
 
•   change its accounting principles, practices or methods.
 
•   take any action that would prevent the merger (or conversion, for Benjamin Franklin Bancorp) from qualifying as a tax-free reorganization.
 
•   take any action that is intended or is reasonably likely to result in: any of its representations or warranties in the merger agreement being or becoming untrue in any material respect at any time at or prior to the effectiveness of the merger; any of the conditions to the merger not being satisfied; or a material violation of any provision of the merger agreement or related documents.

     In addition, Chart Bank has agreed that, except as otherwise expressly contemplated or permitted by the merger agreement or consented to in writing by Benjamin Franklin Bancorp, it will not do any of the following:

•   issue, sell or otherwise permit to become outstanding any additional shares of stock, other than upon exercise of existing stock options.
 
•   grant stock options.
 
•   declare or pay any dividends or other distributions on its capital stock except for a regular quarterly cash dividend not in excess of $0.16 per share or, if declared after April 1, 2005, $0.18 per share.
 
•   enter into, amend or terminate any material contracts.
 
•   adjust, split, combine, redeem, reclassify, purchase or otherwise acquire any shares of its capital stock.
 
•   hire any new employees, except to fill vacancies for positions with a base salary, including bonus, not in excess of stated limits.
 
•   enter into new or amend existing benefit plans, including stock option, deferred compensation, pension, retirement and bonus plans, or accelerate the vesting or exercisability of any benefits or awards under these plans, except for the acceleration of vesting of existing stock options.
 
•   sell, transfer, mortgage, encumber or otherwise dispose of or discontinue any of its assets, deposits, business or properties, or cancel or release any indebtedness or claims held by any person, except in the ordinary course of business.

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•   enter into new or amend existing employment, consulting, severance or similar agreements with directors, officers and employees or increase compensation or any employee benefit, including bonuses, beyond stated limits.
 
•   foreclose upon or take a deed or title to any commercial real estate without first conducting a Phase I environmental assessment of the property, or foreclose if the environmental assessment indicates the presence of material amounts of hazardous substances on that property.
 
•   make any investments in any other company, except as otherwise permitted in connection with its investment securities portfolio.
 
•   make capital expenditures beyond stated limits and only in the ordinary course of business.
 
•   amend its charter or by-laws.
 
•   settle any lawsuits or similar proceedings for an amount in excess of stated limits or resulting in the imposition of any material restriction on its business.
 
•   enter into any derivatives contract, except in the ordinary course of business.
 
•   make any commercial, commercial real estate or industrial loan other than in the ordinary course of business and consistent with existing lending policies and practices.
 
•   restructure or materially change its investment securities portfolio, other than in the ordinary course of business.
 
•   make equity investments in real estate, other than in foreclosed properties, settlements in lieu of foreclosure or troubled loan or debt restructurings in the ordinary course of business.
 
•   change in any material respect its loan or investment policies and procedures.
 
•   enter into, renew, amend or terminate any agreement with respect to office space, operations space or branch space except in the ordinary course of business, or enter into, renew, amend or terminate any such agreement exceeding stated dollar and term limits, whether or not in the ordinary course of business.
 
•   materially breach any material contract or license or any agreement with a governmental authority.
 
•   make an “excess parachute payment” within the meaning of 280G of the Internal Revenue Code or a payment that would be nondeductible under Section 162(m) of the Internal Revenue Code.
 
•   become responsible for the obligations of any other entity or incur any indebtedness for borrowed money, with certain exceptions.
 
•   renew, amend or permit to expire, lapse or terminate any of its material insurance policies, with certain exceptions.

     No Solicitation of Third Party Proposals to Acquire Chart Bank. Chart Bank has also agreed, subject to certain exceptions relating to the fiduciary duties of the Chart Bank board of directors, that neither it nor its officers, directors, employees, agents or representatives will, directly or indirectly:

•   initiate, solicit, encourage or otherwise facilitate any inquiries regarding, or the making of any proposal to engage in, a change in control transaction with respect to Chart Bank; or
 
•   engage in any negotiations concerning, or provide any confidential information or data to or have any discussions with any person or entity relating to, a proposal to engage in a change in control transaction with respect to Chart Bank; or

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•   enter into any agreement, arrangement or understanding with respect to a change in control transaction with respect to Chart Bank, or requiring it (or conditioned upon requiring it) to abandon, terminate or fail to consummate the merger with Benjamin Franklin Bank or any other transactions contemplated by the merger agreement.

     A “change in control transaction” is a merger or similar transaction involving Chart Bank, the disposition of 25.0% or more of the consolidated assets of Chart Bank or the issuance, sale or other disposition of securities representing 19.9% or more of the voting power of Chart Bank or any subsidiary.

     Chart Bank has agreed that it will notify Benjamin Franklin Bancorp immediately if any inquiries, proposals or offers are received by, any such information is requested from, or any discussions or negotiations are sought to be initiated or continued with, any of its officers, directors or employees relating to a proposal to engage in a change in control transaction. Chart Bank has agreed that it will promptly advise Benjamin Franklin Bancorp following receipt of any such proposal and the substance of the proposal, and will keep Benjamin Franklin Bancorp apprised of any related developments, discussions and negotiations of any such proposal on a current basis.

     Employee Matters. The merger agreement contains certain agreements of the parties with respect to various employee matters, which are briefly described below.

     As soon as administratively practicable after the effective time of the merger, Benjamin Franklin Bancorp will take all reasonable action so that employees of Chart Bank and its subsidiaries will:

•   receive employee benefits which are no less favorable than those generally afforded to other employees of Benjamin Franklin Bancorp and its subsidiaries holding similar positions; and
 
•   be entitled to participate in the Benjamin Franklin Bancorp employee benefit plans of general applicability to the same extent as similarly-situated employees of Benjamin Franklin Bancorp and its subsidiaries.

     For purposes of determining eligibility to participate in, the vesting of benefits and for all other purposes (but not for determining the amount of benefits or determining accrual of benefits) under the Benjamin Franklin Bancorp employee benefit plans, Benjamin Franklin Bancorp will recognize years of service with Chart Bank and its subsidiaries to the same extent as such service was credited for such purpose by Benjamin Franklin Bancorp.

     If employees of Chart Bank or any of its subsidiaries become eligible to participate in a medical, dental or health plan of Benjamin Franklin Bancorp, Benjamin Franklin Bancorp will cause each such plan to:

•   waive any preexisting condition limitations to the extent such conditions are covered under the applicable medical, health or dental plans of Benjamin Franklin Bancorp;
 
•   waive any waiting period limitation or evidence of insurability requirement that would otherwise be applicable to such employee on or after the effective time of the merger to the extent such employee had satisfied any similar limitation or requirement under an analogous plan prior to the effective time of the merger; and
 
•   provide full credit under such plans for any deductibles, co-payments and out-of-pocket expenses incurred by the employees and their beneficiaries during the portion of the calendar year prior to such participation.

     Employees of Chart Bank or its subsidiaries (other than employees who are a party to an employment agreement, a severance agreement or a special termination agreement) whose employment is involuntarily terminated other than for cause within two years after the effective time of the merger will

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be entitled to receive severance payments in accordance with Chart Bank’s merger severance benefit program.

     Other Covenants. In the merger agreement, each of Benjamin Franklin Bancorp and Chart Bank agreed to use its reasonable best efforts, in good faith, to take all actions necessary, proper, desirable or advisable to enable the conversion and the merger to be completed, and to:

•   cooperate in preparing applications for approval of regulatory authorities and securities filings;
 
•   provide ongoing access to information about itself to the other party, subject to confidentiality requirements;
 
•   consult with the other party before issuing a press release relating to the merger or conversion, and, except as required by law, rule or regulation, not issue such a release without the other party’s consent, which shall not be unreasonably withheld;
 
•   notify the other party of facts, events and circumstances that would have been required to have been disclosed if known as of the date of the merger agreement;
 
•   provide current financial statements and internal control reports to the other party;
 
•   notify the other of material changes in its business, or the institution or threat of material litigation;
 
•   consult with each other on the introduction of new products and services not currently offered by Chart; or
 
•   make changes or elections with respect to tax matters or accounting methods

Benjamin Franklin Bancorp agreed to take certain additional actions, including:

•   making all regulatory and securities filings necessary for the completion of the conversion and the merger by specified dates;
 
•   convening a special meeting of its corporators to vote on the conversion and the merger, and recommending that the corporators approve the conversion and the merger;
 
•   listing its common stock on the Nasdaq National Market;
 
•   taking steps required to cause the acquisition of its stock under the merger agreement to be exempt from Rule 16b-3 under the Securities Exchange Act of 1934.

Chart Bank agreed to take certain additional actions, including:

•   convening a special meeting of its stockholders to vote on the merger, and recommending that the stockholders approve the merger, except as otherwise required in order for its directors to comply with their fiduciary duties under applicable law;
 
•   cause its affiliates to deliver to Benjamin Franklin Bancorp an affiliate agreement to comply with the requirements of Rule 145 under the Securities Act of 1933 in connection with the sale or transfer of Benjamin Franklin Bancorp common stock received by them in the merger;
 
•   manage its assets and liabilities in accordance with its asset and liability management policy in effect on the date of the merger agreement, and consult on investment programs to be administered by Chart Bank.

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•   consistent with generally accepted accounting principles, the rules and regulations of the Securities and Exchange Commission and applicable banking laws and regulations, modify or change its loan, other real estate owned, accrual, reserve, tax, litigation and real estate valuation policies and practices (including loan classifications and levels of reserves) so as to be applied on a basis that is consistent with that of Benjamin Franklin Bancorp.

     Representations and Warranties. The merger agreement contains representations and warranties by Benjamin Franklin Bancorp and Chart Bank regarding various legal, regulatory, financial and business matters including, but not limited to, the following:

•   organization, standing and authority
 
•   capital structure;
 
•   subsidiaries;
 
•   corporate power and authority;
 
•   regulatory approvals, reports and other matters;
 
•   absence of violation of organizational documents and terms of agreements;
 
•   financial statements;
 
•   absence of undisclosed liabilities;
 
•   material contracts;
 
•   tax matters;
 
•   loan portfolio and allowance for loan losses;
 
•   capitalization;
 
•   absence of material adverse change;
 
•   environmental matters;
 
•   legal proceedings;
 
•   employee benefit plans;
 
•   properties;
 
•   investment securities;
 
•   transactions with affiliates;
 
•   labor matters;
 
•   compliance with the Community Reinvestment Act, Bank Secrecy Act and privacy of customer information requirements contained in any federal and state privacy laws and regulations;
 
•   compliance with laws;
 
•   use of brokers;
 
•   risk management instruments;
 
•   bank owned life insurance;
 
•   intellectual property;

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•   fiduciary accounts;
 
•   books and records;
 
•   insurance;
 
•   credit card accounts; and
 
•   merchant credit card processing services.

     The merger agreement also contains additional representations and warranties by Chart Bank relating to:

•   required vote for the merger and absence of anti-takeover provisions applicable to the merger;
 
•   material interests of certain persons; and
 
•   receipt of a fairness opinion.

     Except as otherwise provided in the merger agreement, these representations and warranties do not survive after the effective time of the merger.

     Termination and Termination Fees. The merger agreement may be terminated at any time prior to the effective time as follows:

•   by mutual consent of Benjamin Franklin Bancorp and Chart Bank.
 
•   by either party if the merger shall not have occurred on or before July 15, 2005 or a later date agreed to in writing by the parties, unless the failure of the merger to occur by that date results from the knowing action or inaction of the party seeking to terminate or, in the case of a termination by Chart Bank, its stockholders’ actions in violation of their obligations under the merger agreement or related voting agreements.
 
•   by either party if the approval of any governmental authority required for completion of the merger shall have been denied by final nonappealable action or an application for approval shall have been permanently withdrawn at the request of a governmental authority.
 
•   by either party if Benjamin Franklin Bancorp’s board of trustees or corporators shall have not approved the conversion, the approval of any governmental authority required for completion of the conversion shall have been denied by final nonappealable action or an application for approval shall have been permanently withdrawn at the request of a governmental authority or a court of competent jurisdiction or other governmental authority shall have issued an order, decree or ruling prohibiting the conversion, which order, decree or ruling shall have become final and nonappealable.
 
•   by either party in the event of a material breach by the other party of any representation or warranty contained in the merger agreement which breach would constitute, if occurring or continuing on the closing date, the failure of the conditions to completion of the merger relating to the accuracy of the representations and warranties and which cannot be or has not been cured within 30 days after the giving of written notice to the breaching party of the breach.
 
•   by either party in the event of a material breach by the other party of any of the covenants or agreements contained in the merger agreement, which breach cannot be or has not been cured within 30 days after the giving of written notice to the breaching party of the breach.

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•   by either party if the Chart Bank stockholders do not approve the merger, provided that Chart Bank may not terminate if it has materially breached its covenants relating to the stockholders meeting.
 
•   by either party if the corporators of Benjamin Franklin Bancorp do not approve the merger and the conversion , provided that Benjamin Franklin Bancorp may not terminate if it has materially breached its covenants relating to the corporators meeting and obtaining all necessary regulatory approvals for the conversion and the merger.
 
•   by Benjamin Franklin Bancorp if, prior to the Chart Bank stockholders meeting at which the merger is considered:

•   Chart Bank materially breaches its covenant regarding third party proposals to acquire Chart Bank, or
 
•   the Chart Bank board fails to recommend to its stockholders that they approve the merger, withdraws such recommendation or modifies or changes such recommendation in a manner adverse in any respect to the interests of Benjamin Franklin Bancorp or
 
•   Chart Bank materially breaches its obligations to call, give notice of, convene and hold the Chart Bank stockholders meeting.

•   by Benjamin Franklin Bancorp if a tender offer is commenced, other than by Benjamin Franklin Bancorp, and the Chart Bank board recommends that its stockholders tender their shares in the tender offer or otherwise fails to recommend that its stockholders reject the tender offer.

     If the merger agreement is terminated as a result of a breach of a representation, warranty, covenant or other agreement that is caused by the gross negligence or willful or intentional breach of a party to the merger agreement, the breaching party is liable to the non-breaching party for all out-of-pocket costs and expenses, including reasonable fees and expenses of lawyers, accountants and investment bankers, incurred by the non-breaching party in connection with the merger agreement, up to a maximum of $500,000.

     In addition, Benjamin Franklin Bancorp would be liable to Chart Bank for Chart Bank’s out-of-pocket costs and expenses, up to a maximum of $500,000:

•   if the merger agreement is terminated because the conversion was not approved by the trustees or corporators of Benjamin Franklin Bancorp or by the regulatory authorities or because the conversion was prohibited by a court or other governmental authority (except under circumstances in which a breach of a representation, warranty or covenant by Chart Bank materially adversely affected Benjamin Franklin Bancorp’s ability to obtain the necessary approvals), or
 
•   if Benjamin Franklin Bancorp has not completed the conversion by July 15, 2005, except that such expense payment would not apply in circumstances where Benjamin Franklin Bancorp is obligated to pay the termination fee described in the next paragraph, and Benjamin Franklin Bancorp would not be obligated to make such a payment if a breach of a representation, warranty or covenant by Chart Bank has materially adversely affected Benjamin Franklin Bancorp’s ability to complete the conversion in a timely manner.

     The merger agreement provides that Benjamin Franklin Bancorp must pay Chart Bank a termination fee of $2.3 million if:

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•   Benjamin Franklin Bancorp has failed to consummate the conversion by July 15, 2005 as a result of a material failure to perform or comply with any of its covenants or agreements in the merger agreement, or
 
•   Chart Bank has terminated the merger agreement because Benjamin Franklin Bancorp has intentionally or willfully breached any of its representations or warranties in the merger agreement or intentionally and willfully failed to perform or comply with any of its covenants or agreements in the merger agreement, in each case to such an extent as to permit Chart Bank to terminate the merger agreement.

     The merger agreement provides that Chart Bank must pay Benjamin Franklin Bancorp a termination fee of $2.3 million if a payment event has occurred before the special payment termination date.

     A “payment event” means any of the following events:

•   without Benjamin Franklin Bancorp’s prior written consent, Chart Bank or the stockholders of Chart Bank have entered into an agreement to effect or have consummated a change in control transaction with a third party.
 
•   Benjamin Franklin Bancorp has terminated the merger agreement because

•   Chart Bank has materially breached its covenant regarding third party proposals to acquire Chart Bank, or
 
•   the Chart Bank board has failed to recommend to its stockholders that they approve the merger, has withdrawn such recommendation or has modified or changed such recommendation in a manner adverse in any respect to the interests of Benjamin Franklin Bancorp or
 
•   Chart Bank has materially breached its obligations to call, give notice of, convene and hold the Chart Bank stockholders meeting;
 
•   or the Chart Bank board has recommended that the stockholders of Chart Bank tender their shares to a third party in a tender offer.

•   Benjamin Franklin Bancorp has terminated the merger agreement because Chart Bank has intentionally or willfully breached any of its representations or warranties in the merger agreement or intentionally and willfully failed to perform or comply with any of its covenants or agreements in the merger agreement, in each case to such an extent as to permit Benjamin Franklin Bancorp to terminate the merger agreement.

     The “special payment termination date” is the earliest to occur of

•   the effectiveness of the merger.
 
•   the date that is 12 months after termination of the merger agreement following the occurrence of a time extension event.
 
•   the date on which the merger agreement is terminated in accordance with its terms, but only if the termination takes place prior to the occurrence of a payment event or a time extension event.

     A “time extension event” is any of the following events:

•   a third party has commenced a tender offer for the Chart Bank common stock.

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•   a third party (or a group) has acquired beneficial ownership of or has the contractual right to acquire beneficial ownership of 15.0% or more of the then outstanding shares of Chart Bank common stock.
 
•   following a third party proposal for a change in control transaction with respect to Chart Bank, the holders of Chart Bank common stock fail to approve the merger agreement at the Chart Bank stockholder meeting.
 
•   following a third party proposal for a change in control transaction with respect to Chart Bank, the Chart Bank stockholders meeting to approve the merger is not held in violation of Chart Bank’s obligations, Chart Bank’s board has withdrawn or modified in a manner adverse to Benjamin Franklin Bancorp the recommendation of Chart Bank’s board with respect to the merger with Benjamin Franklin Bank, or Chart Bank has willfully or intentionally breached any representation, warranty, covenant or obligation in the merger agreement and such breach would entitle Benjamin Franklin Bancorp to terminate the merger agreement.

     Amendment and Waiver. Prior to the effectiveness of the merger, any provision of the merger agreement may be waived by the party benefited by the provision or amended or modified by an agreement in writing among the parties to the merger agreement, except that after the Chart Bank stockholders meeting no amendment may be made that changes in kind or reduces in amount the merger consideration without the further approval of Chart Bank’s stockholders.

     Voting Agreements; Release Agreements. Directors of Chart Bank beneficially owning 39.1% of Chart Bank’s outstanding common stock as of the record date for the stockholders meeting at which the approval of the merger agreement is to be considered have entered into voting agreements with Benjamin Franklin Bancorp pursuant to which each such director has agreed that at any meeting of the stockholders of Chart Bank, or in connection with any written consent of the stockholders of Chart Bank, the director shall cause all of the shares of Chart Bank common stock that he beneficially owns to be counted as present for purposes of calculating a quorum and vote those shares:

•   in favor of adoption and approval of the merger agreement and the transactions contemplated thereby;
 
•   against any action or agreement that would result in a breach of any covenant, representation or warranty or any other obligation or agreement of Chart Bank contained in the merger agreement or of the director contained in the voting agreement; and
 
•   against any third party proposal to acquire Chart Bank or agreement or transaction that is intended, or could reasonably be expected, to materially impede, interfere with, delay, postpone, discourage or materially and adversely affect completion of the merger or any of the transactions contemplated by the merger agreement.

     The voting agreements also provide that the director executing the agreement will not, directly or indirectly, sell, transfer, pledge, assign or otherwise dispose of, or enter into any contract, option, commitment or other arrangement or understanding with respect to the sale, transfer, assignment or other disposition of, any of the shares or option or right to obtain shares of Chart Bank common stock owned by him or her, except as may be permitted under the terms of the voting agreement. The voting agreements will remain in effect until the earlier of the special payment termination date of the mutual written agreement of the parties.

     In addition, each Chart Bank director has entered into a release agreement pursuant to which the director has agreed to release Chart Bank and Benjamin Franklin Bancorp from certain claims such director may have in his capacity as a stockholder of Chart Bank.

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Interests of Chart Bank’s Directors and Officers in the Merger

     Chart Bank’s directors and executive officers have interests in the merger that are different from, or are in addition to, their interests as shareholders of Chart Bank generally. These include, among other things, severance payments and agreement with Richard E. Bolton, Sr., Richard E. Bolton, Jr., Alfred J. Odoardi, Dean Kenney, non-continuing directors and other executive officers of Chart Bank, consulting and non-competition agreements with Messrs. Bolton, Sr. and Bolton, Jr., indemnification rights and insurance coverage and payment of director fees to Chart Bank directors who will serve on the Benjamin Franklin Bancorp board.

     Severance Agreements and Payments. In connection with the Chart Bank merger agreement, we entered into payments and waiver agreements with Richard E. Bolton, Jr., the President and Chief Executive Officer of Chart Bank, and Richard E. Bolton, Sr., the Chairman of the Board of Directors of Chart Bank and an executive officer of its wholly owned subsidiary, CSSI. The payments and waiver agreements provide for the termination of Mr. Bolton, Jr.’s employment agreement and Mr. Bolton, Sr.’s employment and consulting agreement and all of Mr. Bolton, Jr.’s and Mr. Bolton, Sr.’s employment and director relationships with Chart Bank and its subsidiaries, effective upon the merger. The payments and waiver agreements also provide for Chart Bank to make termination payments of $486,000 and $620,000 to Mr. Bolton, Sr. and Mr. Bolton, Jr., respectively, immediately prior to the effectiveness of the merger. Mr. Bolton, Jr.’s payments and waiver agreement also provides that he will be appointed as a director of Benjamin Franklin Bancorp and Benjamin Franklin Bank as of the effective time of the merger.

     In addition, Chart Bank entered into a Special Termination Agreement with Alfred J. Odoardi, Senior Vice President of Chart Bank, as of August 20, 2004. Under the special termination agreement, Mr. Odoardi is entitled to certain severance benefits in the event that his employment with Chart Bank is terminated after a “change in control” for any reason other than death, disability, or “cause,” each as defined in the agreement, including continuation of his base salary and medical benefits for 18 months following termination and full vesting of all unexercisable stock options held by Mr. Odoardi on the date of termination. The value to Mr. Odoardi of the severance pay and benefits continuation under this agreement is $214,645, based on his current level of his base salary and medical benefits. Although the completion of the merger will constitute a change in control under the special termination agreement, it is not expected that Mr. Odoardi’s employment will terminate following the merger.

     As part of the negotiation of the merger, we also agreed that if Dean Kenney, the Treasurer and Chief Financial Officer of Chart Bank, is terminated within two years of the effective date of the merger, if his title or position is reduced or changed during the first two years after the effective date, if his base salary as of the effective date is reduced, or if his new designated place of employment is more than 30 driving miles from his principal place of residence, he will receive severance benefits, including two years of his annual base salary and continuation of his medical and dental benefits for two years following the date of termination. The value to Mr. Kenney of the severance pay and benefits continuation under this agreement is $245,194 based on his current level of his base salary and medical benefits.

     Chart Bank’s other officers whose employment is terminated in connection with the merger, or who resign following the merger by reason of a reduction in pay or increase in commute of greater than 10 miles, will be entitled to receive severance benefits under Chart Bank’s employee severance benefit program. Officers at the level of Vice President and above are entitled to receive severance in an amount equal to five times the officer’s weekly base pay multiplied by the officers’ whole and partial years of service with Chart Bank. Any employee who has completed five full years of service as of the date of the completion of the merger will be entitled to receive an additional lump-sum severance benefit equal to 15.0% of the employee’s annual base salary.

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     Pursuant to the terms of the merger agreement, Chart Bank may make severance payments in the aggregate amount of $120,000 to the three members of the Chart Bank Board of Directors who will not become directors of Benjamin Franklin Bancorp or Benjamin Franklin Bank following the completion of the merger.

     Consulting and Non-Competition Agreements. We have also entered in consulting and non-competition agreements with Messrs. Bolton, Sr. and Bolton, Jr. in connection with the merger. Under these agreements, Messrs. Bolton, Sr. and Bolton, Jr. have agreed to provide consulting services to us and have agreed to non-competition obligations for a period of one year after the effectiveness of the merger. We will pay Messrs. Bolton, Sr. and Bolton, Jr. fees of $310,000 and $150,000, respectively, and will reimburse each of them for their travel or other expenses incurred in connection with the services provided under the consulting and non-competition agreements.

     Indemnification and Insurance. We have agreed that if the merger becomes effective, we will indemnify and hold harmless Chart Bank’s directors, officers and employees arising from actions taken before the effectiveness of the merger, as provided in Chart Bank’s articles of organization and bylaws. The merger agreement also provides for continued directors’ and officers’ liability insurance coverage for Chart Bank’s directors and officers, with respect to acts and omissions in their capacities as officers and directors of Chart Bank prior to the merger, for a period of six years from the effectiveness of the merger. That insurance may also protect Benjamin Franklin Bancorp and Benjamin Franklin Bank in connection with their obligations to indemnify those directors and officers.

     Director Fees. Six of Chart Bank’s directors will continue as directors of Benjamin Franklin Bancorp and Benjamin Franklin Bank following the merger. These directors will be entitled to receive payment of the directors fees and other benefits provided to directors of these entities, including, among other things, the annual $10,000 retainer, per meeting fees and annual retainers for committee members.

THE CONVERSION AND THE OFFERING

General

     Our Board of Trustees adopted the plan of conversion on October 28, 2004. Pursuant to the plan, Benjamin Franklin Bancorp will convert from a Massachusetts-chartered bank holding company in mutual form to a Massachusetts-chartered bank holding company in stock form, and will drop “M.H.C.” and add “Inc.” to its name. Benjamin Franklin Bank is now and will continue to be the wholly-owned subsidiary of Benjamin Franklin Bancorp. As part of the conversion, Benjamin Franklin Bancorp is offering between 4,250,000 and 5,750,000 shares of common stock to the public, which offering may be increased to 6,612,500, and is forming a new charitable foundation, to which additional shares of Benjamin Franklin Bancorp common stock will be contributed.

     We intend to use the net proceeds for the cash merger consideration portion of the acquisition of Chart Bank, approximately $22,492,000 assuming that the Chart Bank options are cashed out at the closing rather than being exercised by optionees prior to the closing; and for the loan to the employee stock ownership plan to fund its purchase of shares of common stock, between $3.7 million and $4.9 million, or $5.6 million if the offering is increased by 15.0%. Of the net proceeds remaining, we intend to retain at the parent-company level between $10.9 million and $20.8 million of the net proceeds, or $26.6 million if the offering range is increased by 15.0%, and to invest in Benjamin Franklin Bank approximately $4.9 million to $8.6 million of the net proceeds, or $10.7 million if the offering range is increased by 15.0%. The conversion will be consummated only upon the issuance of at least the minimum number of shares of our common stock offered pursuant to the plan of conversion and reorganization. The minimum may include up to 2,082,500 shares of the common stock of Benjamin Franklin Bancorp that will be issued in connection with the acquisition of Chart Bank.

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     The plan of conversion provides that we will offer shares of common stock for sale in the subscription offering to eligible account holders, supplemental eligible account holders, our tax-qualified employee benefit plans (specifically our employee stock ownership plan) and to officers, directors and employees of Benjamin Franklin Bank who are not eligible or supplemental eligible account holders.

     Subject to the purchase priority rights of these holders of subscription rights, we may also offer the common stock for sale in a direct community offering to members of the general public, with a preference given to natural persons residing in the Massachusetts counties of Norfolk, Worcester and Middlesex. The direct community offering may begin at the same time as, during or after the subscription offering.

     We may sell any shares of Benjamin Franklin Bancorp common stock that are not sold in the subscription offering or the direct community offering to the general public in a syndicated community offering. In addition, if we do not receive aggregate subscriptions in the subscription and direct community offerings totaling 4,250,000 shares (the minimum of the offering range), we may choose to apply up to 2,082,500 unsubscribed shares toward the merger consideration to be paid to the Chart Bank stockholders in the Chart Bank merger. Such shares will “count” in determining whether we have issued the minimum number of shares required to be issued in the conversion, but will not increase the total number of shares to be issued to the Chart Bank stockholders.

     We have the right to accept or reject, in whole or in part, any orders to purchase shares of the common stock received in the direct community offering or the syndicated community offering. The community offerings must be completed within 45 days after the completion of the subscription offering unless otherwise extended by the Massachusetts Commissioner of Banks. See “—Direct Community Offering” on page [#] and “—Syndicated Community Offering” on page [#].

     We determined the number of shares of common stock to be offered in the offering based upon an independent valuation appraisal of the estimated pro forma market value of the Benjamin Franklin Bancorp common stock. All shares of common stock to be sold in the offering will be sold at $10 per share. The independent valuation will be updated and the final number of the shares of common stock to be issued in the offering will be determined at the completion of the offering. See “—Stock Pricing and Number of Shares to be Issued” on page [#] for more information as to the determination of the estimated pro forma market value of the common stock.

Reasons For The Conversion

     The primary reasons for the conversion and related stock offering are:

•   to provide us with the capital and the form of consideration (stock) necessary to acquire Chart Bank;
 
•   to facilitate growth through other acquisitions and de novo branching opportunities;
 
•   to increase our capital base so as to support internal growth through lending in communities we serve;
 
•   to enhance existing products and services and support the development of new products and services; and
 
•   to improve our overall competitive position.

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     As a stock holding company, we will have greater flexibility in structuring further mergers and acquisitions, including the form of consideration that we can use to pay for an acquisition. Our current mutual holding company structure limits our ability to offer shares of common stock as consideration for a merger or acquisition since a mutual holding company is required to own a majority of the outstanding shares of common stock of its subsidiary bank. Potential sellers often want stock for at least part of the purchase price. Our stock holding company structure will enable us to offer stock or cash consideration, or a combination thereof, and will therefore enhance our ability to compete with other bidders when acquisition opportunities arise. Except for the agreement to acquire Chart Bank, we do not have any agreement or understanding as to any specific acquisition.

Effects Of The Conversion

     General. Each depositor in a mutual savings bank has both a deposit account in the institution and a pro rata interest in the equity of the institution based upon the balance in the depositor’s account. This interest may only be realized in the event of a liquidation of the savings institution. However, this ownership interest is tied to the depositor’s account and has no tangible market value separate from such deposit account. Any depositor who opens a deposit account obtains a pro rata ownership interest in the equity of the institution without any additional payment beyond the amount of the deposit. A depositor who reduces or closes such depositor’s account receives the balance in the account but receives nothing for such depositor’s ownership interest in the equity of the institution, which is lost to the extent that the balance in the account is reduced. Consequently, depositors of a mutual savings bank have no way to realize the value of their ownership interest, except in the unlikely event that the mutual savings bank is liquidated. In such event, the depositors of record at that time would share pro rata in any residual surplus and reserves after other claims, including claims of depositors to the amounts of their deposits, are paid.

     When a mutual savings bank converts to stock form, permanent non-withdrawable capital stock is created to represent the ownership of the institution’s equity and the former pro rata interest of depositors is thereafter represented exclusively by their liquidation rights as described below. Capital stock is separate and apart from deposit accounts and cannot be and is not insured by the FDIC or any other governmental agency. Certificates are issued to evidence ownership of the capital stock sold in connection with the conversion. The stock certificates are transferable, and, therefore, the stock may be sold or traded with no effect on any deposit account the seller or trader may hold in the institution.

     Continuity. While the conversion is pending, our normal business of accepting deposits and making loans will continue without interruption. Benjamin Franklin Bank will continue to be subject to regulation by the Massachusetts Commissioner of Banks and the FDIC. After the conversion, we will continue to provide existing services to depositors, borrowers and other customers under Benjamin Franklin Bank’s current policies by its present management and staff, as supplemented by Chart Bank personnel.

     The directors and officers of Benjamin Franklin Bank at the time of the conversion will continue to serve as directors and officers of Benjamin Franklin Bank after the conversion, and the trustees and officers of Benjamin Franklin Bancorp at the time of the conversion will continue to serve as directors and officers of Benjamin Franklin Bancorp after the conversion. In each case, upon completion of the Chart Bank merger, six directors of Chart Bank will become directors of both Benjamin Franklin Bank and Benjamin Franklin Bancorp. See “Management of Benjamin Franklin Bancorp and Benjamin Franklin Bank—Directors of Benjamin Franklin Bancorp” on page [#].

     Effect on Deposit Accounts. The conversion will have no effect on Benjamin Franklin Bank’s deposit accounts, except to the extent that funds in the account are withdrawn to purchase conversion shares and except with respect to liquidation rights. Subject to certain limitations, each such account will be insured by the FDIC to the same extent as before the conversion, and each such account will continue

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to be insured in full for amounts in excess of FDIC limits by the excess insurer of savings bank deposits, the DIF. Depositors will continue to hold their existing certificates, passbooks and other evidences of their accounts.

     Effect on Loans. No loan outstanding from Benjamin Franklin Bank will be affected by the conversion, and the amount, interest rate, maturity and security for each loan will remain as they were contractually fixed prior to the conversion.

     Tax Effects. Benjamin Franklin Bancorp has received a favorable opinion regarding the federal income tax consequences of the conversion to the effect that the conversion will not result in any adverse federal or state tax consequences to eligible account holders. See “—Tax Aspects Of The Conversion And The Chart Bank Acquisition” on page [#].

     Liquidation Rights. The plan of conversion provides for us to establish and maintain a liquidation account for the benefit of eligible account holders and supplemental eligible account holders, in an amount equal to the net worth of Benjamin Franklin Bancorp as set forth in the most recent consolidated statement of financial condition contained in this prospectus. In the unlikely event of a complete liquidation of Benjamin Franklin Bancorp, and only in such event, each eligible account holder and supplemental eligible account holder who continues to maintain such account holder’s deposit account at Benjamin Franklin Bank following the conversion would be entitled to a distribution from the liquidation account prior to any payment to the holders of Benjamin Franklin Bancorp’s capital stock (but following all liquidation payments to creditors, including depositors).

     Each eligible account holder and supplemental eligible account holder would initially have a pro rata interest in the total liquidation account based on the proportion that the aggregate balance of such person’s qualifying deposit accounts on May 31, 2003 (the eligibility record date) and [   ] (the supplemental eligibility record date), as applicable, bears to the aggregate balance of all qualifying deposit accounts of all eligible account holders and supplemental eligible account holders on such dates. For this purpose, qualifying deposit accounts include all savings, time, demand, interest bearing demand, money market and passbook savings accounts maintained at Benjamin Franklin Bank (excluding any escrow accounts). The liquidation account will be an off-balance sheet memorandum account that will not be reflected in the published financial statements of Benjamin Franklin Bank or Benjamin Franklin Bancorp.

     If, however, on the last day of any fiscal year of Benjamin Franklin Bancorp commencing after the completion of the conversion, the amount in any deposit account is less than either the amount in such deposit account on May 31, 2003 (with respect to an eligible account holder) or on [   ] (with respect to a supplemental eligible account holder), or the amount in such deposit account on any previous fiscal year closing date, then the interest in the liquidation account relating to such deposit account would be reduced in an amount proportional to the reduction in such deposit balance, and such interest will cease to exist if such deposit account is closed. In addition, no interest in the liquidation account would ever be increased despite any subsequent increase in the related deposit account.

     Neither Benjamin Franklin Bank nor Benjamin Franklin Bancorp will be required to set aside funds for the purpose of establishing the liquidation account, and the creation and maintenance of the liquidation account will not operate to restrict the use or application of any of the net worth accounts of Benjamin Franklin Bank or Benjamin Franklin Bancorp, except that neither Benjamin Franklin Bank nor Benjamin Franklin Bancorp, as the case may be, shall declare or pay a cash dividend on, or repurchase any of, its capital stock if the effect of such a transaction would be to cause its net worth to be reduced below the amount required for the liquidation account.

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     Any payments to eligible account holders or supplemental eligible account holders pursuant to liquidation rights would be separate and apart from the payment to them of any insured deposit accounts. Any assets remaining after the above liquidation rights of eligible account holders and supplemental eligible account holders are satisfied would be distributed to the stockholders of Benjamin Franklin Bancorp.

     We have no plans to liquidate.

Approvals Required

     Our Board of Trustees [and corporators (including a majority of our “independent” corporators)] have approved our plan of conversion and the establishment and funding of the Benjamin Franklin Bank Charitable Foundation. [The Massachusetts Commissioner of Banks and the Federal Reserve Board have also conditionally approved the plan of conversion;] such approvals, however, do not constitute a recommendation or endorsement of the plan of conversion by the Massachusetts Commissioner of Banks or the Federal Reserve Board. The Massachusetts Commissioner must issue a further approval (based on the final updated appraisal) before we can consummate the conversion and issue shares of common stock.

     Our Board of Trustees also has approved the merger agreement for the acquisition of Chart Bank. The merger agreement also has been approved by the Board of Directors of Chart Bank, but has not yet been approved by the stockholders of Chart Bank.

     The merger must be also be approved by the Massachusetts Commissioner of Banks and the Federal Deposit Insurance Corporation. Benjamin Franklin has filed applications for approval of the merger with the Commissioner of Banks and the Federal Deposit Insurance Corporation. In addition, the Massachusetts Board of Bank Incorporation has advised Benjamin Franklin Bancorp that Board of Bank Incorporation approval of the merger is required as well. Accordingly, Benjamin Franklin Bancorp has filed an application with the Board of Bank Incorporation, although it does not believe that it is or would become at any point in connection with the merger a bank holding company under Massachusetts law or that the approval of the Board of Bank Incorporation is legally required.

The Stock Offering

     We are offering between 4,250,000 and 5,750,000 shares of common stock (subject to adjustment to up to 6,612,500) pursuant to this prospectus and the plan of conversion.

     The shares of common stock are being offered for sale at a purchase price of $10 per share in the subscription offering pursuant to subscription rights in the following order of priority to:

•   eligible account holders: each holder of deposit accounts with aggregate balances of $50.00 or more on May 31, 2003;
 
•   supplemental eligible account holders: each holder of deposit accounts (other than our directors and officers and their associates) with aggregate balances of $50.00 or more on [   ];
 
•   our tax qualified employee plans, specifically our employee stock ownership plan; and
 
•   officers, directors, and employees of Benjamin Franklin Bank who do not have a higher priority right.

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     Subject to the prior rights of holders of subscription rights, remaining shares of common stock may be offered in the direct community offering at $10 per share to certain members of the general public, with a preference first given to natural persons residing in the Massachusetts counties of Norfolk, Worcester and Middlesex. The direct community offering may begin at the same time as the subscription offering, or after the subscription offering begins. We also may offer shares of common stock not purchased in the subscription offering or the direct community offering through a syndicated community offering. If we do not receive orders for at least 4,250,000 shares of common stock (the minimum of the offering range), then we may apply up to 2,082,500 unsubscribed shares toward the merger consideration to be paid to Chart Bank stockholders, but only in order to complete the offering and conversion at the minimum of the offering range. Applying unsubscribed shares to the merger will not affect the number of shares issued to Chart Bank stockholders in the merger, but will reduce the total number of shares outstanding after the conversion and merger and will therefore increase the percentage of the combined company owned by former Chart Bank stockholders.

     We have the right to reject any order submitted in the offering by a person we believe is making false representations or who we otherwise believe, either alone or acting in concert with others, is violating, evading, circumventing, or intends to violate, evade or circumvent, the terms and conditions of the plan of conversion.

Stock Pricing And Number Of Shares To Be Issued

     The plan of conversion and regulations require that the aggregate purchase price of the common stock issued in the offering must be based on the appraised pro forma market value of the common stock, as determined by an independent valuation. Benjamin Franklin Bancorp has retained RP Financial, LC. to make this valuation. For its services in preparing the initial valuation, RP Financial, LC. will receive a fee of $75,000. This amount does not include a fee of $15,000 to be paid to RP Financial, LC. for assistance in the preparation of a business plan. We have agreed to indemnify RP Financial, LC. and its employees and affiliates against specified losses, including any losses in connection with claims under the federal securities laws, arising out of its services as appraiser, except where RP Financial, LC.’s liability results from its bad faith, willful misconduct or gross negligence.

     The independent valuation states that as of November 26, 2004, the estimated pro forma market value of the shares to be outstanding immediately following the conversion (including the shares to be issued to the Chart Bank stockholders in the acquisition and shares to be issued to the Benjamin Franklin Bank Charitable Foundation), was $69,915,750 at the minimum of the valuation range and $85,515,750 at the maximum of the valuation range, with a midpoint value of $78,015,750. Based on the $10 per share offering price determined by the Board of Trustees of Benjamin Franklin Bancorp, this valuation range equates to total shares outstanding of 6,991,575 at the minimum, 8,551,575 at the maximum and 7,801,575 at the midpoint of the valuation range. Based on this valuation range, the estimated pro forma market value of the shares to be sold in the offering (not including shares issued to the Chart Bank stockholders in the acquisition or the shares issued to the Benjamin Franklin Bank Charitable Foundation) is as follows: $42,500,000 at the minimum and $57,500,000 at the maximum, with a midpoint of $50,000,000. Based on the $10 per share offering price determined by the Board of Trustees, the minimum of the offering range is 4,250,000 shares, the midpoint of the offering range is 5,000,000 shares and the maximum of the offering range is 5,750,000 shares. In addition, we are contributing to the Benjamin Franklin Bank Charitable Foundation a number of shares of our authorized but unissued common stock in an amount up to 8.0% of the number of shares actually sold in the offering, up to a maximum of 400,000 shares. The contribution of the common stock to the Benjamin Franklin Bank Charitable Foundation will not be considered in determining whether the minimum number of shares of common stock (4,250,000) has been issued in order to complete the offering.

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     The Board of Trustees of Benjamin Franklin Bancorp reviewed the independent valuation and, in particular, considered the following:

•   Our financial condition and results of operations;
 
•   Comparison of our financial performance ratios to those of other financial institutions of similar size; and
 
•   Stock market conditions generally and in particular for financial institutions.

     All of these factors are set forth in the independent valuation. The Board of Trustees also reviewed the methodology and the assumptions used by RP Financial, LC. in preparing the independent valuation and the Board believes that such assumptions were reasonable. The offering range may be amended with the approval of the bank regulators, if required, as a result of subsequent developments in our financial condition or market conditions generally. In the event the independent valuation is updated to amend the pro forma market value of the Benjamin Franklin Bancorp common stock to less than $42.5 million or more than $66.1 million, the appraisal will be filed with the Securities and Exchange Commission by post-effective amendment.

     The independent valuation is not intended, and must not be construed, as a recommendation of any kind as to the advisability of purchasing our common stock. RP Financial, LC. did not independently verify the financial statements and other information that Benjamin Franklin Bancorp provided to them, nor did RP Financial, LC. independently value the assets or liabilities of Benjamin Franklin Bancorp. The independent valuation considers Benjamin Franklin Bancorp as a going concern and should not be considered as an indication of the liquidation value of Benjamin Franklin Bancorp. Moreover, because the valuation is necessarily based upon estimates and projections of a number of matters, all of which may change from time to time, no assurance can be given that persons purchasing our common stock in the offering will thereafter be able to sell their shares at prices at or above the $10 price.

     Following commencement of the subscription offering, the maximum of the valuation range may be increased by up to 15.0% to up to $66.1 million, which will result in a corresponding increase of up to 15.0% in the maximum of the offering range to up to 6,612,500 shares, to reflect changes in the market and financial conditions, demand for the shares or regulatory considerations, without resoliciting subscribers. We will not decrease the minimum of the valuation range and the minimum of the offering range without a resolicitation of subscribers. The subscription price of $10 per share will remain fixed.

     If the update to the independent valuation prior to the completion of the conversion results in an increase in the maximum of the offering range to more than $66.1 million and a corresponding increase in the offering size to more than 6,612,500 shares, or a decrease in the minimum of the offering range to less than $42.5 million and a corresponding decrease in the offering size to fewer than 4,250,000 shares, then, after consulting with the bank regulators, we may terminate the plan of conversion and cancel deposit account withdrawal authorizations and return by check all funds received promptly with interest at Benjamin Franklin Bank’s applicable passbook savings rate. Alternatively, we may hold a new offering with a new offering range, extend the offering period and commence a resolicitation of subscribers or take other actions as permitted by the bank regulators in order to complete the conversion and the offering. In the event that a resolicitation is commenced, all subscribers will have the right to increase, decrease or rescind their subscriptions. Unless we receive an affirmative response from an investor within a reasonable designated period of time, we will return all funds received promptly to the investor as described above. Any resolicitation would not exceed 45 days unless further extended with the approval of the bank regulators.

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     An increase in the number of shares to be issued in the offering would decrease both a subscriber’s ownership interest and Benjamin Franklin Bancorp’s pro forma earnings and stockholders’ equity on a per share basis while increasing pro forma earnings and stockholders’ equity on an aggregate basis. A decrease in the number of shares to be issued in the offering would increase both a subscriber’s ownership interest and Benjamin Franklin Bancorp’s pro forma earnings and stockholders’ equity on a per share basis, while decreasing pro forma earnings and stockholders’ equity on an aggregate basis. For a presentation of the effects of these changes, see “Pro Forma Data” on page [#].

     Copies of the appraisal report of RP Financial, LC. are available for inspection at the main office of Benjamin Franklin Bank and as specified under “Additional Information” on page [#].

Subscription Offering And Subscription Rights

     In accordance with the plan of conversion, rights to subscribe for shares of common stock in the subscription offering have been granted in the following descending order of priority. The filling of all subscriptions that we receive will depend on the availability of common stock after satisfaction of all subscriptions of all persons having prior rights in the subscription offering and to the maximum, minimum and overall purchase limitations set forth in the plan of conversion and as described below under “Limitations on Common Stock Purchases” on page [#].

     Priority 1: Eligible Account Holders. Each eligible account holder will receive, as first priority and without payment, nontransferable rights to subscribe for common stock in an amount of up to $150,000. See “—Limitations on Common Stock Purchases” on page [#].

     If there are not sufficient shares available to satisfy all subscriptions by eligible account holders, shares first will be allocated so as to permit each subscribing eligible account holder to purchase a number of shares sufficient to make such eligible account holder’s total allocation equal to the lesser of 100 shares or the number of shares subscribed for. Thereafter, unallocated shares will be allocated among the remaining eligible account holders whose subscriptions remain unfilled in the proportion that the amount of their respective qualifying deposit bears to the total amount of qualifying deposits of all eligible account holders whose subscriptions remain unfilled. However, no fractional shares shall be issued.

     To ensure proper allocation of stock, each eligible account holder must list on his or her stock order form all deposit accounts in which he or she had an ownership interest on the eligibility record date of May 31, 2003. Failure to list an account could result in fewer shares being allocated than if all accounts had been disclosed. The subscription rights of eligible account holders who are also directors, trustees, corporators or officers of Benjamin Franklin Bank or Benjamin Franklin Bancorp, and the associates of such persons, will be subordinated to the subscription rights of other eligible account holders to the extent attributable to increased deposits in the one year period preceding May 31, 2003. “Associates” is defined below under “Limitations on Common Stock Purchases” on page [#].

     Priority 2: Supplemental Eligible Account Holders. To the extent that there are shares remaining after satisfaction of the subscriptions by eligible account holders, each supplemental eligible account holder will receive, as a second priority and without payment, non-transferable rights to subscribe for common stock in an amount of up to $150,000. See “—Limitations on Common Stock Purchases” on page [#].

     If there are not sufficient shares available to satisfy all subscriptions by supplemental eligible account holders, shares first will be allocated so as to permit each subscribing supplemental eligible account holder to purchase a number of shares sufficient to make such supplemental eligible account holder’s total allocation equal to the lesser of 100 shares or the number of shares subscribed for. Thereafter, unallocated shares will be allocated among the remaining supplemental eligible account

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holders whose subscriptions remain unfilled in the proportion that the amount of their respective qualifying deposit bears to the total amount of qualifying deposits of all supplemental eligible account holders whose subscriptions remain unfilled. However, no fractional shares shall be issued.

     To ensure proper allocation of stock, each supplemental eligible account holder must list on his or her stock order form all deposit accounts in which he or she had an ownership interest on the supplemental eligibility record date of [   ]. Failure to list an account could result in fewer shares being allocated than if all accounts had been disclosed.

     Priority 3: The Tax-Qualified Employee Benefit Plans. On a third priority basis, our tax-qualified employee benefit plans will receive, as a third priority and without payment therefor, non-transferable subscription rights to purchase up to 10.0% of the common stock to be issued in the offering. As a tax-qualified employee benefit plan, our employee stock ownership plan expects to purchase 8.0% of the shares issued in the offering, including shares issued to the Benjamin Franklin Bank Charitable Foundation. Subscriptions by the employee stock ownership plan will not be aggregated with shares of common stock purchased directly by or which are otherwise attributable to any other participants in the subscription and community offerings, including subscriptions of any of Benjamin Franklin Bank’s directors, officers or employees. In the event that the total number of shares offered is increased to more than 5,750,000 shares, the tax qualified plans will have a first priority right to purchase any such shares up to an aggregate of 10.0% of the shares issued in the offering and issued to the Benjamin Franklin Bank Charitable Foundation. Unsubscribed shares applied toward the merger consideration payable to Chart Bank stockholders in order achieve the minimum of the offering range are considered “issued in the offering” for purposes of calculating the subscription rights of the tax qualified plans. We reserve the right to purchase shares of common stock in the open market following the offering in order to fund the employee stock ownership plan, rather than subscribing for shares in the subscription offering.

     Priority 4: Employees, Officers, Directors and Trustees of Benjamin Franklin Bank or Benjamin Franklin Bancorp. On a fourth priority basis, each employee, officer, director and trustee of Benjamin Franklin Bank or Benjamin Franklin Bancorp at the time of the offering who is not eligible in the preceding priority categories shall receive non-transferable subscription rights to subscribe for common stock in an amount up to $150,000. See "—Limitations on Common Stock Purchases” on page [#]. In the event that persons in this category subscribe for more shares of stock than are available for purchase by them, shares will be allocated among such subscribing persons on an equitable basis, such as by giving weight to the period of service, compensation and position of the individual subscriber.

Direct Community Offering

     To the extent that shares remain available for purchase after satisfaction of all subscriptions of the eligible account holders, supplemental eligible account holders, Benjamin Franklin Bank’s tax qualified employee benefit plans, officers, directors trustees and employees of Benjamin Franklin Bank, we may, at our discretion, offer shares pursuant to the plan of conversion to members of the general public in a direct community offering. In the direct community offering, preference will be given to natural persons residing in the Massachusetts counties of Norfolk, Worcester and Middlesex.

     The term “residing” means any person who occupies a dwelling within the indicated counties, has an intent to remain for a period of time and manifests the genuineness of that intent by establishing an ongoing physical presence together with an indication that such presence is something other than merely transitory in nature. We may utilize depositor or loan records or such other evidence provided to us to make a determination as to whether a person is a resident. In all cases, the determination of resident status will be made by us in our sole discretion.

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     Stock sold in the direct community offering will be offered and sold in a manner to achieve a wide distribution of the stock. No person may purchase more than $150,000 of common stock in the direct community offering. Orders accepted will each be filled to a maximum percentage to be determined by us and not to exceed the purchase limitations in the plan. Thereafter remaining shares will be allocated on an equal number of shares per order basis until all orders have been filled. Allocation of shares if an oversubscription occurs in this category of the offering will give preference to natural persons residing in the counties listed above, so that each such Person may receive 100 shares, and thereafter, on an equal number of shares basis until all available shares have been allocated.

     The direct community offering, if any, may commence concurrently with or subsequent to the commencement of the subscription offering and shall terminate no later than 45 days after the expiration of the subscription offering unless extended by Benjamin Franklin Bancorp, with the approval of the Massachusetts Commissioner of Banks and the Federal Reserve Board, if necessary. We may terminate the direct community offering or the syndicated community offering at any time after we have received orders for at least the minimum number of shares available for purchase in the offering.

Syndicated Community Offering

     If feasible, our Board may decide to offer for sale shares of common stock not subscribed for or purchased in the subscription and direct community offerings to the general public by a selling group of broker-dealers in a syndicated community offering, subject to such terms, conditions and procedures as we may determine, in a manner that will achieve the widest distribution of the common stock. However, we retain the right to accept or reject in whole or in part any orders in the syndicated community offering. In the syndicated community offering, any person may purchase up to $150,000 of common stock, subject to the overall maximum purchase limitation. See “—Limitations on Common Stock Purchases” on page [#]. Any syndicated offering will likely begin as soon as possible after the expiration of the subscription and direct community offerings.

     The syndicated community offering will be conducted in accordance with certain SEC rules applicable to best efforts offerings. Generally under those rules, Ryan Beck, a broker-dealer, will deposit funds it receives prior to the closing date from interested investors into a separate non-interest bearing bank account. If and when all the conditions for the closing are met, funds for common stock sold by Ryan Beck in the syndicated community offering will be promptly delivered to us. If the offering closes, but some or all of an interested investor’s funds are not accepted by us, those funds will be returned to the interested investor promptly after the closing, without interest. If the offering does not close, funds in the account will be promptly returned, without interest, to the potential investor. Normal customer ticketing will be used. In the syndicated community offering, stock order forms will not be used.

     If for any reason we cannot effect a syndicated community offering of shares remaining unsold after the subscription offering and direct community offering, and we have not received orders for at least 4,250,000 shares of common stock (the minimum of the offering range), then we may apply up to 2,082,500 unsubscribed shares toward the merger consideration to be paid to Chart Bank stockholders, but only in order to complete the offering and conversion at the minimum of the offering range. This limitation was established to ensure that the Chart Bank stockholders’ ownership interest in Benjamin Franklin Bancorp will not exceed 49.0%. Alternatively, we will try to make other arrangements for the sale of remaining shares, if possible. The bank regulators must approve any such arrangements.

Expiration Date of the Offering.

     The subscription offering will expire at 10:00 a.m., Massachusetts time, on [date], 2005, unless we extend this period with the approval of the Massachusetts Commissioner of Banks and, if necessary, the Federal Reserve Board. Subscription rights will expire then, whether or not each eligible depositor

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can be located. We may decide to extend the expiration date of the subscription offering for any reason, whether or not subscriptions have been received for shares at the minimum, midpoint or maximum of the offering range. Subscription rights which have not been exercised prior to the expiration date, as extended, will become void.

     We will not execute orders until at least the minimum number of shares in the offering range has been issued. This minimum issuance may include shares allocated to Chart Bank stockholders as merger consideration. If at least 4,250,000 shares have not been issued within 45 days after the expiration of the subscription offering and the Massachusetts Commissioner of Banks and the Federal Reserve Board, if necessary, have not consented to an extension, all funds delivered to us to purchase shares of common stock in the offering will be returned promptly to the subscribers with interest at Benjamin Franklin Bank’s passbook savings rate and all deposit account withdrawal authorizations will be canceled. If an extension beyond the 45-day period following the subscription offering expiration date is granted by the Massachusetts Commissioner of Banks and the Federal Reserve Board, if necessary, we will notify subscribers of the extension of time and of the rights of subscribers to increase, decrease or cancel their subscriptions during that time. Unless we receive an affirmative response from an investor within a reasonable designated period of time, we will return all funds received promptly to the investor as described above. Extensions may not go beyond October 28, 2006, which is two years after the approval of the plan of conversion by the Board of Trustees.

Limitations On Common Stock Purchases

     The plan of conversion includes the following limitations on the number of shares of common stock that may be purchased during the conversion:

(1)   No person, or persons exercising subscription rights through a single qualifying deposit account, may purchase fewer than 25 shares of common stock;
 
(2)   Our tax qualified employee benefit plans are entitled to purchase up to 10.0% of the shares issued in the offering and issued to the Benjamin Franklin Bank Charitable Foundation. As a tax qualified employee benefit plan, our employee stock ownership plan intends to purchase 8.0% of the shares issued in the offering, including shares issued to the Benjamin Franklin Bank Charitable Foundation.
 
(3)   Except for our employee stock ownership plan, no person may subscribe for more than $150,000 of common stock in the offering. In the subscription offering, no persons exercising subscription rights through a single qualifying deposit account held jointly may purchase more than this amount.
 
(4)   Except for the employee stock ownership plan, no person, together with associates or persons acting in concert with such person (please see definitions of “associate” or “acting in concert” below), may purchase more than $250,000 of common stock in all categories of the offering combined.
 
(5)   The aggregate number of shares of common stock that may be purchased in all categories of the offering by officers, directors, trustees and corporators of Benjamin Franklin Bancorp and Benjamin Franklin Bank and their associates may not exceed 30.0% of the total             shares issued in the offering.

     Depending upon market or financial conditions, our Board of Trustees may increase or decrease the individual and overall maximum purchase limitations, provided that the purchase limitations may not be increased to a percentage that is more than 5.0% of the common stock offered for sale and may not be

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decreased to a percentage that is less than one-tenth of a percent (0.10%) of the common stock offered for sale in the conversion. Such an increase or decrease would require the approval of the bank regulators but would not require further approval of Benjamin Franklin Bancorp’s corporators unless the bank regulators so require. If a purchase limitation is increased, subscribers in the subscription offering who ordered the maximum amount will be, and some other large subscribers may be, given the opportunity to increase their subscriptions up to the then applicable limit. The effect of this type of resolicitation will be an increase in the number of shares owned by subscribers who choose to increase their subscriptions.

     In the event of an increase in the offering range of up to 15.0% of the total number of shares of common stock offered in the offering, shares will be allocated in the following order of priority in accordance with the plan of conversion:

(1)   to fill the employee benefit plans’ subscription for up to 10.0% of the total number of shares of common stock issued in the offering and issued to the Benjamin Franklin Bank Charitable Foundation;
 
(2)   in the event that there is an oversubscription at the eligible account holder or supplemental eligible account holder levels, to fill unfulfilled subscriptions of these subscribers according to their respective priorities; and
 
(3)   to fill unfulfilled subscriptions in the community offering, with preference given first to natural persons residing in the Massachusetts counties of Norfolk, Worcester and Middlesex, and then to other members of the general public.

     The term “associate” of a person means:

(1)   any corporation or organization of which the person is an officer, partner or 10.0% stockholder (other than Benjamin Franklin Bancorp, Benjamin Franklin Bank or a majority-owned subsidiary of either of them);
 
(2)   any trust or other estate in which the person has a substantial beneficial interest or serves as a trustee or in a similar fiduciary capacity;
 
(3)   any relative or spouse of the person, or any relative of the spouse, who either has the same home as the person or who is a director or trustee or officer of Benjamin Franklin Bancorp or Benjamin Franklin Bank, and
 
(4)   any person “acting in concert” with any of the persons or entities specified in clauses 1-3 above.

     The term “acting in concert” means

(1)   knowing participation in a joint activity or conscious parallel action towards a common goal, whether or not pursuant to an express agreement; or
 
(2)   persons seeking to combine or pool their voting or other interests (such as subscription rights) in the securities of an issuer for a common purpose, pursuant to any contract, understanding, relationship, agreement or other arrangement, whether written or otherwise.

     We have the sole discretion to determine whether prospective purchasers are “associates” or “acting in concert.” Persons living at the same address, and persons exercising subscription rights through qualifying deposits registered at the same address, whether or not related, will be deemed to be

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acting in concert unless we determine otherwise. Trustees and directors of Benjamin Franklin Bancorp and Benjamin Franklin Bank are not treated as acting in concert solely as a result of their board membership.

Other Restrictions

     Notwithstanding any other provision of the plan of conversion, no person is entitled to purchase any shares of common stock to the extent the purchase would be illegal under any federal or state law or regulation, including state “blue sky” registrations, or would violate regulations or policies of the National Association of Securities Dealers, Inc., particularly those regarding free riding and withholding. We may ask for an acceptable legal opinion from any purchaser as to the legality of his or her purchase and we may refuse to honor any purchase order if an opinion is not timely furnished. We will make reasonable efforts to comply with the securities laws of all states in the United States in which depositors entitled to subscribe for shares reside. However, no shares are expected to be offered or sold under the plan of conversion to any person who resides in a foreign country, or in a state of the United States in which fewer than 100 persons otherwise eligible to subscribe for shares under the plan of conversion reside and where Benjamin Franklin Bancorp, Benjamin Franklin Bank or their employees would be required to register, under the securities laws of the state, as a broker, dealer, or agent. No payments will be made in lieu of the granting of subscription rights to any person.

Certain Restrictions On Purchase Or Transfer Of Our Shares After Conversion

     Shares of common stock purchased in the offering by the directors, trustees, officers and corporators of Benjamin Franklin Bancorp and Benjamin Franklin Bank generally may not be sold for a period of one year following the closing of the conversion, except in the event of the death or substantial disability, as determined by the Massachusetts Commissioner of Banks, of such person, or upon the written approval of the Commissioner of Banks. Each certificate for restricted shares will bear a legend giving notice of this restriction on transfer, and instructions will be issued to the effect that any transfer within this time period of any certificate or record ownership of the shares other than as provided above is not to be recognized or effected. Any shares of common stock issued at a later date as a stock dividend, stock split, or otherwise, with respect to the restricted stock will be similarly restricted.

     The directors and officers of Benjamin Franklin Bancorp and Benjamin Franklin Bank and their associates may not purchase Benjamin Franklin Bancorp common stock for three years after the conversion is completed without the Massachusetts Commissioner of Banks’s approval except through a broker or dealer registered with the Securities and Exchange Commission. This restriction does not apply to negotiated transactions involving more than 1.0% of Benjamin Franklin Bancorp’s outstanding common stock or to stock purchases under a stock-based incentive plan. The directors and officers also will be restricted by the insider trading rules and other applicable requirements of the federal securities laws.

     Under NASD guidelines, members of the NASD and their associates are subject to certain restrictions on transfer of securities purchased in accordance with subscription rights and to certain reporting requirements upon purchase of these securities.

Plan Of Distribution And Marketing Arrangements

     Offering materials have been initially distributed through mailings to those eligible to subscribe in the subscription offering. To assist in the marketing of our common stock, we have retained Ryan Beck & Co., Inc., which is a broker/dealer registered with the National Association of Securities Dealers, Inc. Ryan Beck & Co., Inc. will assist us in the offering by:

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(1)   Acting as our financial advisor for the conversion, providing administrative services and managing the Stock Information Center;
 
(2)   Targeting our sales efforts, including assisting in the preparation of marketing materials; and
 
(3)   Soliciting orders for common stock.

     For these services, Ryan Beck & Co., Inc. will receive a marketing fee equal to 1.0% of the dollar amount of common stock sold in the subscription and direct community offerings. No fee will be payable to Ryan Beck & Co., Inc. with respect to shares purchased by officers, directors and employees or their immediate families, the Benjamin Franklin Bank Charitable Foundation, any common stock purchased by our tax-qualified and non-qualified employee benefit plans, or any shares issued to the Chart Bank stockholders as merger consideration. In the event that Ryan Beck & Co., Inc. sells common stock through a group of broker-dealers in a syndicated community offering, it will be paid a fee equal to 1.0% of the dollar amount of total shares sold in the syndicated community offering, which fee along with the fee payable to selected dealers (which may include Ryan Beck & Co., Inc. for the shares it sells) shall not exceed 6.0% in the aggregate. Ryan Beck & Co., Inc. will also be reimbursed for its allocable expenses in an amount not to exceed $25,000 and for its legal fees in an amount not to exceed $75,000.

     We will indemnify Ryan Beck & Co., Inc. against liabilities and expenses, including legal fees, incurred in connection with certain claims or litigation arising out of or based upon untrue statements or omissions contained in the offering materials for the common stock, including liabilities under the Securities Act of 1933.

     Some of our Directors and executive officers may participate in the solicitation of offers to purchase common stock. These persons will be reimbursed for their reasonable out-of-pocket expenses incurred in connection with the solicitation. Other regular, full-time employees of Benjamin Franklin Bank may assist in the offering, but only in ministerial capacities, and may provide clerical work in effecting a sales transaction. No offers or sales may be made by tellers or at the teller counters. All sales activity will be conducted in a segregated or separately identifiable area of our executive offices apart from they area accessible to the general public. Investment-related questions of prospective purchasers will be directed to executive officers or registered representatives of Ryan Beck & Co., Inc. Our other employees have been instructed not to solicit offers to purchase shares of common stock or provide advice regarding the purchase of common stock. We will rely on Rule 3a4-1 under the Securities Exchange Act of 1934, and sales of common stock will be conducted within the requirements of Rule 3a4-1, so as to permit officers, directors, trustees and employees to participate in the sale of common stock. None of our officers, directors, trustees or employees will be compensated in connection with their participation in the offering.

Timing and Procedure For Purchasing Shares

     Expiration Date. The offering is expected to expire at 10:00 a.m., Massachusetts time, on [date], 2005, unless extended by Benjamin Franklin Bancorp with the approval of the Massachusetts Commissioner of Banks and the Federal Reserve Board, if required. If the offering is extended beyond [date], 2005, we will be required to resolicit subscribers before proceeding. In no event may we extend the offering beyond October 28, 2006.

     Prospectus Delivery. To ensure that each purchaser receives a prospectus at least 48 hours before the expiration date of the offering in accordance with Rule 15c2-8 of the Securities Exchange Act of 1934, no prospectus will be mailed any later than five days prior to this date or hand delivered any later than two days prior to this date. Execution of an order form will confirm receipt of delivery in accordance

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with Rule 15c2-8. Order forms will be distributed only if preceded or accompanied by a prospectus. Subscription funds will be maintained in a segregated account at Benjamin Franklin Bank.

     Termination of Offering; Rejection of Orders. We reserve the right in our sole discretion to terminate the offering at any time and for any reason, in which case we will cancel any deposit account withdrawal holds and promptly return all funds submitted, plus interest at Benjamin Franklin Bank’s applicable passbook savings rate from the date of receipt.

     We have the right to reject any order submitted in the offering by a person who we believe is making false representations or who we otherwise believe, either alone or acting in concert with others, is violating, evading, circumventing, or intends to violate, evade or circumvent the terms and conditions of the plan of conversion.

     Use of Order Forms. In order to purchase shares of common stock in the subscription offering and direct community offering, you must complete an order form and remit payment. Incomplete order forms or order forms that are not signed are not required to be accepted. We will not be required to accept orders submitted on photocopied or facsimiled stock order forms. All order forms must be received prior to 10:00 a.m. Massachusetts time on [date], 2005. We are not required to accept order forms that are not received by that time, are executed defectively or are received without full payment or without appropriate withdrawal instructions. We are not required to notify subscribers of incomplete or improperly executed order forms, and we have the right to waive or permit the correction of incomplete or improperly executed order forms. We do not represent, however, that we will do so and we have no affirmative duty to notify any prospective subscriber of any such defects. You may submit your order form and payment in one of three ways: by mail using the return envelope provided, by overnight delivery to the indicated address noted on the back of the order form or by hand delivery to the Stock Information Center located at 58 Main Street, Franklin, Massachusetts. Order forms may not be delivered to Benjamin Franklin Bank branch offices. Once tendered, an order form cannot be modified or revoked without our consent. We reserve the absolute right, in our sole discretion, to reject any order form received in the community offering, in whole or in part, at the time of receipt or at any time prior to completion of the offering. If you are ordering shares, you must represent that you are purchasing shares for your own account and that you have no agreement or understanding with any person for the sale or transfer of the shares. Our interpretation of the terms and conditions of the plan of conversion and of the acceptability of the order forms will be final.

     By signing the order form, you will be acknowledging that the common stock is not a deposit or savings account that is federally insured or otherwise guaranteed by Benjamin Franklin Bank or the Federal government, and that you received a copy of this prospectus. However, signing the order form will not result in you waiving your rights under the Securities Act of 1933 or the Securities Exchange Act of 1934.

     Payment for Shares. Payment for all shares of common stock will be required to accompany all completed order forms for the purchase to be valid. Payment for shares may be made by:

•   Personal check, bank check or money order made payable directly to Benjamin Franklin Bancorp, Inc. (do not endorse third-party checks); or
 
•   Authorization of withdrawal from the types of Benjamin Franklin Bank deposit accounts designated on the stock order form.

     Appropriate means for designating withdrawals from deposit accounts at Benjamin Franklin Bank are provided on the order form. The funds designated must be available in the account(s) at the time the order form is received. A hold will be placed on these funds, making them otherwise unavailable to the

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depositor. Please do not designate withdrawal from accounts with check-writing privileges. Provide a check, instead, because we do not intend to place holds on these type of accounts. If you request that we do so, we reserve the right to interpret that as your authorization to immediately withdraw the funds as if you had remitted a check in the amount. Funds authorized for withdrawal will continue to earn interest within the account at the contract rate until the conversion is completed, at which time the designated withdrawal will be made. Interest penalties for early withdrawal applicable to certificate accounts will not apply to withdrawals authorized for the purchase of shares of common stock; however, if a withdrawal results in a certificate account with a balance less than the applicable minimum balance requirement, the certificate will be cancelled at the time the conversion is completed without penalty and, thereafter, the remaining balance will earn interest at Benjamin Franklin Bank’s applicable passbook savings rate. In the case of payments made by check or money order, these funds must be available in the account(s) and will be immediately cashed and placed in a segregated account at Benjamin Franklin Bank and interest will be paid at Benjamin Franklin Bank’s applicable passbook savings rate, calculated from the date payment is received until the conversion is completed or terminated. Third party and Benjamin Franklin Bank line of credit checks may not be remitted as payment for your order, nor will wire transfers be accepted as payment. Once we receive your executed order form, it may not be modified, amended or rescinded without our consent, unless the offering is not completed by [date], 2005 or the offering range is revised, in which events purchasers will be given the opportunity to increase, decrease or rescind their orders for a specified period of time.

     Using IRA Funds. Owners of self-directed IRAs may use the assets of such IRAs to purchase shares of common stock in the subscription and community offerings, provided that such IRAs are not maintained at Benjamin Franklin Bank. Persons who wish to use assets in IRAs maintained at Benjamin Franklin Bank may not authorize direct withdrawal from these accounts. They must have their IRA accounts transferred to an unaffiliated institution or broker to purchase shares of common stock in the subscription and community offerings. Assistance on how to transfer IRAs maintained at Benjamin Franklin Bank can be obtained from the Stock Information Center. If you are interested in using funds in a Benjamin Franklin Bank IRA or any other IRA to purchase common stock, contact the Stock Information Center as soon as possible, preferably at least two weeks prior to the end of the offering period, because processing such transactions takes additional time, and whether such funds can be used may depend on limitations imposed by the institution where such funds are currently held. We cannot guarantee that you will be able to use such funds.

     Our employee stock ownership plan will not be required to pay for shares purchased in the offering until completion of the offering, provided there is a loan commitment from an unrelated financial institution or Benjamin Franklin Bancorp to lend to the employee stock ownership plan the necessary amount to fund the purchase.

     Regulations prohibit Benjamin Franklin Bank from lending funds or extending credit to any persons to purchase shares of common stock in the offering.

     Delivery of Stock Certificates. Certificates representing shares of common stock issued in the offering and Benjamin Franklin Bank checks representing any applicable refund and/or interest on subscriptions made by personal check, money order or bank check will be mailed to the persons entitled thereto at the certificate registration address noted on the order form, as soon as practicable following completion of the offering and receipt of all necessary regulatory approvals. Any certificates returned as undeliverable will be held by the transfer agent until claimed by persons legally entitled thereto or otherwise disposed of in accordance with applicable law. Until certificates for the common stock are available and delivered to purchasers, purchasers may not be able to sell the shares of common stock which they ordered, even though the common stock will have begun trading.

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Restrictions On Transfer Of Subscription Rights And Shares

     Applicable regulations and the plan of conversion prohibit any person with subscription rights, including the eligible account holders, supplemental eligible account holders, and officers, directors and employees of Benjamin Franklin Bancorp and Benjamin Franklin Bank, from transferring or entering into any agreement or understanding to transfer the legal or beneficial ownership of the subscription rights issued under the plan of conversion or the shares of common stock to be issued upon their exercise. These rights may be exercised only by the person to whom they are granted and only for his or her account. When registering your stock purchase on the order form, you should not add the name(s) of persons who have no subscription rights or who qualify only in a lower purchase priority than you do. Doing so may jeopardize your subscription rights. Each person exercising subscription rights will be required to certify that he or she is purchasing shares solely for his or her own account and that he or she has no agreement or understanding regarding the sale or transfer of such shares. The regulations also prohibit any person from offering or making an announcement of an offer or intent to make an offer to purchase subscription rights or shares of common stock to be issued upon their exercise prior to completion of the offering.

     We will pursue any and all legal and equitable remedies in the event we become aware of the transfer of subscription rights, and we will not honor orders that we believe involve the transfer of subscription rights.

Purchasers’ Consent to the Merger

     By subscribing for or purchasing shares of Benjamin Franklin Bancorp common stock in the offering, subscribers and other purchasers will be approving and consenting to the completion of the Chart Bank merger, which is expected to occur immediately following completion of the conversion. The Order Form, which each subscriber in the subscription offering and any direct community offering will be required to sign, contains an acknowledgment of such approval and consent.

Stock Information Center

     If you have any questions regarding the stock offering, you may call our Stock Information Center, toll free, at [   ], Monday through Friday between 9:30 a.m. and 4:00 p.m., Massachusetts time. You may also visit our Stock Information Center, which is located at our headquarters, 58 Main Street, Franklin, Massachusetts. The Stock Information Center will be closed on weekends and bank holidays. Our branches will not have offering materials and cannot accept completed order forms.

Tax Aspects Of The Conversion And The Chart Bank Acquisition

     The Conversion. Based in part upon representations of Benjamin Franklin Bank and Benjamin Franklin Bancorp, Foley Hoag llp has issued its opinion regarding certain federal income tax consequences of the conversion. Foley Hoag llp has opined that:

(1)   the conversion will constitute a reorganization under Code section 368(a)(1)(F);
 
(2)   none of Benjamin Franklin Bank or Benjamin Franklin Bancorp will recognize gain or loss as a result of the conversion; and
 
(3)   eligible account holders and supplemental eligible account holders will not recognize gain or loss upon their receipt of nontransferable subscription rights to purchase shares of Benjamin Franklin Bancorp, provided the amount to be paid for such shares is equal to fair market value of such shares.

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     Unlike private rulings of the IRS, an opinion of counsel is not binding on the IRS and the IRS could disagree with conclusions reached in the opinion. If there is a disagreement, we can not guarantee that the IRS would not prevail in a judicial or administrative proceeding.

     Foley Hoag llp has also opined, subject to the limitations and qualifications in its opinion, that, for purposes of the Massachusetts corporate income tax, the conversion will not become a taxable transaction to Benjamin Franklin Bank, Benjamin Franklin Bancorp, the stockholders of Benjamin Franklin Bancorp or the depositors of Benjamin Franklin Bank.

     The Chart Bank Merger. In addition, Foley Hoag llp has opined that, for federal income tax purposes,

(1)   the merger with Chart Bank will constitute a reorganization within the meaning of Section 368(a) of the Code or will be treated as part of a reorganization within the meaning of Section 368(a) of the Code;
 
(2)   no gain or loss will be recognized by Benjamin Franklin Bank, Benjamin Franklin Bancorp or Chart Bank as a result of the merger;
 
(3)   no gain or loss will be recognized by a stockholder of Chart Bank who exchanges all of such stockholder’s Chart Bank common stock solely for shares of Benjamin Franklin Bancorp common stock;
 
(4)   the basis of Benjamin Franklin Bancorp common stock to be received (including any fractional shares deemed received for tax purposes) by a stockholder of Chart Bank will be the same as the basis of the Chart Bank common stock surrendered in exchange therefor; and
 
(5)   the holding period of the Benjamin Franklin Bancorp common stock to be received by a stockholder of Chart Bank will include the period during which the stockholder held the shares of Chart Bank common stock surrendered in exchange therefor, provided that such Chart Bank common stock is held as a capital asset by such stockholder at the effective time of the merger.

Accounting Treatment Of The Conversion And The Chart Bank Merger

     As a result of purchase accounting treatment, the assets and liabilities of Chart Bank will be adjusted for purposes of generally accepted accounting principles to reflect their market value to Benjamin Franklin Bancorp with any excess purchase price becoming goodwill. See “Pro Forma Data” on page [#].

THE BENJAMIN FRANKLIN BANK CHARITABLE FOUNDATION

General.

     In furtherance of our commitment to the communities we serve, we intend to establish a new charitable foundation, the Benjamin Franklin Bank Charitable Foundation, in connection with the conversion. The plan of conversion provides that the Benjamin Franklin Bank Charitable Foundation will be established as a non-stock corporation and will be funded with an initial contribution of a number of shares of its authorized but unissued common stock in an amount up to 8.0% of the number of shares actually sold in the offering, up to a maximum of 400,000 shares. The contribution of common stock to the Benjamin Franklin Bank Charitable Foundation will be dilutive to the interests of stockholders and

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will have an adverse impact on the reported earnings of Benjamin Franklin Bancorp in 2005, the year in which the foundation is established. The contribution of the common stock to the Benjamin Franklin Bank Charitable Foundation will not be included in determining whether the minimum number of shares of common stock (4,250,000) has been sold in order to complete the offering.

Purpose of the Benjamin Franklin Bank Charitable Foundation

     The purpose of the Benjamin Franklin Bank Charitable Foundation is to provide funding to support charitable causes and community development activities in the communities we serve. The Benjamin Franklin Bank Charitable Foundation will be dedicated completely to community activities and the promotion of charitable causes, and may be able to support such activities in manners that are not presently available to us. We believe that the Benjamin Franklin Bank Charitable Foundation will enable us to assist the communities within our market area in areas beyond community development and lending and will enhance our current activities under the Community Reinvestment Act.

     We further believe that the funding of the Benjamin Franklin Bank Charitable Foundation with shares of Benjamin Franklin Bancorp common stock will allow our community to share in the potential growth and success of Benjamin Franklin Bank long after the conversion. The Benjamin Franklin Bank Charitable Foundation will accomplish that goal by providing for continued ties between it and Benjamin Franklin Bank, thereby forming a partnership within the communities in which Benjamin Franklin Bank operates and surrounding marketing areas.

Structure Of The Charitable Foundation

     The Benjamin Franklin Bank Charitable Foundation will be incorporated under Massachusetts law as a non-stock, nonprofit corporation. Under its Bylaws, the Benjamin Franklin Bank Charitable Foundation’s Board of Directors will be comprised of individuals that are existing or former directors or officers of Benjamin Franklin Bancorp or Benjamin Franklin Bank. The Articles of Organization of the Benjamin Franklin Bank Charitable Foundation will provide that the corporation is organized exclusively for charitable purposes as set forth in Section 501(c)(3) of the Internal Revenue Code. The Benjamin Franklin Bank Charitable Foundation’s articles of organization will further provide that no part of the net earnings of the charitable foundation will inure to the benefit of, or be distributable to, its directors, officers or members.

     The board of directors of the Benjamin Franklin Bank Charitable Foundation will be responsible for establishing its grant and donation policies, consistent with the purposes for which it was established. As directors of a nonprofit corporation, directors of the Benjamin Franklin Bank Charitable Foundation will at all times be bound by their fiduciary duty to advance the charitable foundation’s charitable goals, to protect its assets and to act in a manner consistent with the charitable purposes for which the charitable foundation is established. The directors of the Benjamin Franklin Bank Charitable Foundation also will be responsible for directing the activities of the charitable foundation, including the management and voting of the shares of common stock of Benjamin Franklin Bancorp held by the charitable foundation. However, as required by regulatory authorities, all shares of common stock held by the Benjamin Franklin Bank Charitable Foundation must be voted in the same ratio as all other shares of the common stock on all proposals considered by stockholders of Benjamin Franklin Bancorp.

     The Benjamin Franklin Bank Charitable Foundation’s place of business will be located at our administrative offices. The board of directors of the Benjamin Franklin Bank Charitable Foundation will appoint such officers and employees as may be necessary to manage its operations. To the extent applicable, we will comply with the affiliates restrictions set forth in Sections 23A and 23B of the Federal Reserve Act and regulations governing transactions between Benjamin Franklin Bank and the foundation.

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     The Benjamin Franklin Bank Charitable Foundation will receive working capital from:

(1)   any dividends that may be paid on Benjamin Franklin Bancorp’s shares of common stock in the future;
 
(2)   within the limits of applicable federal and state laws, loans collateralized by the shares of common stock; or
 
(3)   the proceeds of the sale of any of the shares of common stock in the open market from time to time.

     As a private foundation under Section 501(c)(3) of the Internal Revenue Code, the Benjamin Franklin Bank Charitable Foundation will be required to distribute annually in grants or donations a minimum of 5.0% of the average fair market value of its net investment assets. Legislation has been introduced that, if enacted, could have the impact of increasing the charitable foundation’s required annual distribution in grants or donations. One of the conditions imposed on the gift of common stock is that the amount of common stock that may be sold by the Benjamin Franklin Bank Charitable Foundation in any one year shall not exceed 5.0% of the average market value of the assets held by the Benjamin Franklin Bank Charitable Foundation, except where the board of directors of the charitable foundation determines that the failure to sell an amount of common stock greater than such amount would result in a long-term reduction of the value of its assets and/or would otherwise jeopardize its capacity to carry out its charitable purposes.

Tax Considerations

     Our independent tax advisor, Foley Hoag llp, has advised us that an organization created for the above purposes should qualify as a Section 501(c)(3) exempt organization under the Internal Revenue Code and should be classified as a private foundation. The Benjamin Franklin Bank Charitable Foundation will submit a timely request to the Internal Revenue Service to be recognized as an exempt organization. As long as the Benjamin Franklin Bank Charitable Foundation files its application for tax-exempt status within 15 months from the date of its organization, and provided the Internal Revenue Service approves the application, its effective date as a Section 501(c)(3) organization will be the date of its organization. Our independent tax advisor, however, has not rendered any advice on whether the Benjamin Franklin Bank Charitable Foundation’s tax exempt status will be affected by the regulatory requirement that all shares of common stock of Benjamin Franklin Bancorp held by the Benjamin Franklin Bank Charitable Foundation must be voted in the same ratio as all other outstanding shares of common stock of Benjamin Franklin Bancorp on all proposals considered by stockholders of Benjamin Franklin Bancorp.

     Benjamin Franklin Bank is authorized by federal law to make charitable contributions. We believe that the conversion presents a unique opportunity to establish and fund a charitable foundation given the substantial amount of additional capital being raised. In making such a determination, we considered the dilutive impact to our stockholders of the contribution of shares of common stock to the Benjamin Franklin Bank Charitable Foundation. We believe that the contribution to the Benjamin Franklin Bank Charitable Foundation in excess of the 10.0% annual limitation on charitable deductions described below is justified given Benjamin Franklin Bank’s capital position and its earnings, the substantial additional capital being raised in the conversion and the potential benefits of the Benjamin Franklin Bank Charitable Foundation to our community. See “Capitalization” on page [#], “Regulatory Capital Compliance” on page [#], and “Comparison of Independent Valuation and Pro Forma Financial Information With and Without the Foundation” on page [#]. The amount of the contribution will not adversely affect our financial condition. We therefore believe that the amount of the charitable

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contribution is reasonable given our pro forma capital position, and it does not raise safety and soundness concerns.

     We have received an opinion from our independent tax advisor that Benjamin Franklin Bancorp’s contribution of its shares of stock to the Benjamin Franklin Bank Charitable Foundation should not constitute an act of self-dealing and that we should be entitled to a deduction in the amount of the fair market value of the stock at the time of the contribution less the nominal amount that the Benjamin Franklin Bank Charitable Foundation is required to pay Benjamin Franklin Bancorp for such stock. We are permitted to deduct only an amount equal to 10.0% of our annual taxable income in any one year. We are permitted under the Internal Revenue Code to carry the excess contribution over the five-year period following the contribution to the Benjamin Franklin Bank Charitable Foundation. We estimate that substantially all of the contribution should be deductible over the six-year period. However, we do not have any assurance that the Internal Revenue Service will grant tax-exempt status to the charitable foundation. Furthermore, even if the contribution is deductible, we may not have sufficient earnings to be able to use the deduction in full. We do not expect to make any further contributions to the Benjamin Franklin Bank Charitable Foundation within the first five years following the initial contribution, unless such contributions would be deductible under the Internal Revenue Code. Any such decisions would be based on an assessment of, among other factors, our financial condition at that time, the interests of our stockholders and depositors, and the financial condition and operations of the foundation.

     Although we have received an opinion from our independent tax advisor that we should be entitled to a deduction for the charitable contribution, there can be no assurances that the Internal Revenue Service will recognize the Benjamin Franklin Bank Charitable Foundation as a Section 501(c)(3) exempt organization or that the deduction will be permitted. In such event, our contribution to the Benjamin Franklin Bank Charitable Foundation would be expensed without tax benefit, resulting in a reduction in earnings in the year in which the Internal Revenue Service makes such a determination.

     As a private foundation, earnings and gains, if any, from the sale of common stock or other assets are exempt from federal and state income taxation. However, investment income, such as interest, dividends and capital gains, is generally taxed at a rate of 2.0%. After the first year, the rate could be reduced to 1.0% if certain distribution requirements are met. The Benjamin Franklin Bank Charitable Foundation will be required to file an annual return with the Internal Revenue Service within four and one-half months after the close of its fiscal year. The Benjamin Franklin Bank Charitable Foundation will be required to make its annual return available for public inspection. The annual return for a private foundation includes, among other things, an itemized list of all grants made or approved, showing the amount of each grant, the recipient, any relationship between a grant recipient and the foundation’s managers and a concise statement of the purpose of each grant.

Regulatory Requirements Imposed On The Charitable Foundation

     Establishment of the Benjamin Franklin Bank Charitable Foundation is expected to be subject to the following conditions to be agreed to by the Benjamin Franklin Bank Charitable Foundation as a condition to receiving the Massachusetts Commissioner of Banks’s approval to the conversion:

  •   the foundation be dedicated to charitable purposes within certain specified communities, including the communities in which Benjamin Franklin Bank and Chart Bank currently maintain banking offices and certain contiguous communities;
 
  •   the foundation must vote its shares in the same ratio as all other holders of shares;
 
  •   the Massachusetts Division of Banks can examine the foundation;

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  •   the foundation must comply with all supervisory directives or regulatory bulletins imposed by the Massachusetts Division of Banks;
 
  •   the foundation will operate according to written policies adopted by its board of directors, including a business plan and a conflict of interest policy;
 
  •   the foundation will provide annual reports to the Massachusetts Division of Banks describing the grants made and the grant recipients; and
 
  •   the foundation will not engage in self-dealing and shall comply with all laws necessary to maintain its tax-exempt status under the Internal Revenue Code.

     The Benjamin Franklin Bank Charitable Foundation will also need to comply with the requirement that the establishment and funding of the Benjamin Franklin Bank Charitable Foundation be approved by: (1) a majority vote of Benjamin Franklin Bancorp’s corporators present and voting at a special meeting called for such purpose; and (2) the majority vote of all “independent” corporators (who shall not constitute less than sixty percent (60%) of all corporators eligible to vote) present and voting at a special meeting called for such purpose.

     Consummation of the conversion and the offering of common stock is not conditioned upon corporator or regulatory approval of the charitable foundation. Failure to approve the charitable foundation may, however, materially increase the pro forma market value of Benjamin Franklin Bancorp. See “Comparison of Independent Valuation and Pro Forma Financial Information With and Without the Foundation” on page [#].

FEDERAL AND STATE TAXATION OF BENJAMIN FRANKLIN BANCORP AND BENJAMIN FRANKLIN BANK

Federal Taxation

     General. Benjamin Franklin Bancorp and Benjamin Franklin Bank will be subject to federal income taxation in the same general manner as other corporations, with some exceptions discussed below. Benjamin Franklin Bancorp’s federal income tax returns are not currently under audit and have not been audited during the past five years. The following discussion of federal taxation is intended only to summarize certain pertinent federal income tax matters and is not a comprehensive description of the tax rules applicable to Benjamin Franklin Bancorp.

     Bad Debt Reserves. Benjamin Franklin Bank is permitted to establish a reserve for bad debts and to make annual additions to the reserve. These additions can, within specified formula limits, be deducted in connection with the calculation of Benjamin Franklin Bank’s taxable income. Pursuant to the Small Business Protection Act of 1996, savings institutions were required to recapture (over a six year period) of the excess of tax bad debt reserves accumulated after December 31, 1987.

     Taxable Distributions and Recapture. Prior to the Small Business Protection Act of 1996, bad debt reserves created prior to January 1, 1988 were subject to recapture into taxable income should Benjamin Franklin Bank fail to meet certain thrift asset and definitional tests. New federal legislation eliminated these thrift related recapture rules. However, under current law, pre-1988 reserves remain subject to recapture should Benjamin Franklin Bank make certain non-dividend distributions, pay dividends in excess of earnings and profits or cease to maintain a bank charter. At September 30, 2004, Benjamin Franklin Bank’s total federal pre-1988 reserve was $3.1 million. This reserve reflects the cumulative effects of federal tax deductions by Benjamin Franklin Bank for which no federal income tax provision has been made.

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     Minimum Tax. The Internal Revenue Code imposes an alternative minimum tax (AMT) at a rate of 20.0% on a base of regular taxable income plus certain tax preferences, (the alternative minimum taxable income or AMTI). The AMT is payable to the extent such AMTI is in excess of an exemption amount and the AMT exceeds the regular income tax. Net operating losses can offset no more than 90.0% of AMTI. Certain payments of alternative minimum tax may be used as credits against regular tax liabilities in future years. Benjamin Franklin Bank has not been subject to the alternative minimum tax and has no such amounts available as credits for carryover.

     Net Operating Loss Carryovers. A financial institution may carry back net operating losses to the preceding two taxable years and forward to the succeeding 20 taxable years. At September 30, 2004, Benjamin Franklin Bank had no net operating loss carryforwards for federal income tax purposes.

     Capital Loss Carryovers. A financial institution may carry back capital losses to the preceding three taxable years and forward to the succeeding five taxable years. At September 30, 2004, Benjamin Franklin Bank had $6.7 million in capital loss carryforwards for federal income tax purposes which expire on December 31, 2006.

     Corporate Dividends-Received Deduction. Benjamin Franklin Bancorp may exclude from its income 100.0% of dividends received from Benjamin Franklin Bank since they are both members of the same affiliated group of corporations.

State Taxation

     For Massachusetts income tax purposes, a consolidated return cannot be filed. Instead, each entity files separate annual income tax returns. Benjamin Franklin Bancorp’s state tax returns, as well as those of its subsidiaries, are not currently under audit and have not been audited during the past five years.

     Before July 1995, Massachusetts savings banks had to pay an annual Massachusetts excise (income) tax equal to 12.54% of its pre-tax income. In 1995, legislation was enacted to reduce the Massachusetts bank excise (income) tax rate and to allow Massachusetts-based financial institutions to apportion income earned in other states. Further, this legislation expands the applicability of the tax to non-bank entities and out-of-state financial institutions. The Massachusetts excise tax rate for savings banks is currently 10.5% of federal taxable income, adjusted for certain items. Taxable income includes gross income as defined under the Internal Revenue Code, plus interest from bonds, notes and evidences of indebtedness of any state, including Massachusetts, less deductions, but not the credits, allowable under the provisions of the Internal Revenue Code, except for those deductions relating to dividends received and income or franchise taxes imposed by a state or political subdivision. Carryforwards and carrybacks of net operating losses are not allowed.

     A financial institution or business corporation is generally entitled to special tax treatment as a “security corporation” under Massachusetts law provided that: (a) its activities are limited to buying, selling, dealing in or holding securities on its own behalf and not as a broker; and (b) it has applied for, and received, classification as a “security corporation” by the Commissioner of the Massachusetts Department of Revenue. A security corporation that is also a bank holding company under the Code must pay a tax equal to 0.33% of its gross income. A security corporation that is not a bank holding company under the Code must pay a tax equal to 1.32% of its gross income. Benjamin Franklin Bancorp is considering whether to seek to qualify as a security corporation. To do so, it would need to (a) apply for, and receive, security corporation classification by the Massachusetts Department of Revenue; and (b) not conduct any activities deemed impermissible under the governing statutes and the various regulations, directives, letter rulings and administrative pronouncements issued by the Massachusetts Department of Revenue. If it decides to seek such qualification, it would establish a subsidiary for the purpose of

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making the loan to the employee stock ownership plan, since making such a loan directly could disqualify it from classification as a security corporation.

REGULATION AND SUPERVISION

General

     Benjamin Franklin Bank is a Massachusetts-chartered stock savings bank and a wholly owned subsidiary of Benjamin Franklin Bancorp. Benjamin Franklin Bank’s deposits are insured up to applicable limits by the FDIC through the Bank Insurance Fund and by the Depositors Insurance Fund of the Deposit Insurance Fund of Massachusetts for amounts in excess of the FDIC insurance limits. Benjamin Franklin Bank is subject to extensive regulation by the Massachusetts Division of Banks, as its chartering agency, and by the FDIC, as its deposit insurer. Benjamin Franklin Bank is required to file reports with, and is periodically examined by, the FDIC and the Massachusetts Division of Banks concerning its activities and financial condition and must obtain regulatory approvals prior to entering into certain transactions, including, but not limited to, mergers with or acquisitions of other savings institutions. Benjamin Franklin Bank is a member of the Federal Home Loan Bank and is subject to certain limited regulation by the Federal Reserve Board.

     Benjamin Franklin Bancorp, as a bank holding company, is subject to regulation by the Federal Reserve Board and is required to file reports with the Federal Reserve Board.

Massachusetts Bank Regulation

     General. As a Massachusetts-chartered savings bank, Benjamin Franklin Bank is subject to supervision, regulation and examination by the Massachusetts Division of Banks and to various Massachusetts statutes and regulations which govern, among other things, investment powers, lending and deposit-taking activities, borrowings, maintenance of surplus and reserve accounts, distribution of earnings and payment of dividends. In addition, Benjamin Franklin Bank is subject to Massachusetts consumer protection and civil rights laws and regulations. The Massachusetts Commissioner of Banks’s approval is required for a Massachusetts bank to establish or close branches, merge with other banks, organize a holding company, issue stock and undertake certain other activities.

     In response to a Massachusetts law enacted in 1996, the Massachusetts Commissioner of Banks adopted rules that generally give Massachusetts banks powers equivalent to those of national banks. The Commissioner also has adopted procedures reducing regulatory burdens and expense and expediting branching by well-capitalized and well-managed banks.

     Investment Activities. In general, Massachusetts-chartered savings banks may invest in preferred and common stock of any corporation organized under the laws of the United States or any state provided such investments do not involve control of any corporation and do not, in the aggregate, exceed 4.0% of the bank’s deposits. Massachusetts-chartered savings banks may in addition invest an amount equal to 1.0% of their deposits in stocks of Massachusetts corporations or companies with substantial employment in the commonwealth which have pledged to the Commissioner of Banks that such monies will be used for further development within the Commonwealth. See also “—Federal Regulation—Investment Activities” on page [#] for federal restrictions on equity investments. At the present time, Benjamin Franklin Bank does not have authority to invest in equity securities.

     Branching. With the approval of the Massachusetts Commissioner of Banks, a bank may establish and maintain one or more branch offices in any city or town within The Commonwealth of Massachusetts where, in the opinion of the Commissioner, the public would benefit by the establishment of additional banking facilities.

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     Massachusetts law permits an out-of-state bank (subject to various regulatory approvals and to reciprocity in its home state) to establish and maintain bank branches in Massachusetts by (i) merging with a Massachusetts bank that has been in existence for at least three years, (ii) acquiring a branch or branches of a Massachusetts bank without acquiring the entire bank or (iii) opening such branches de novo. Massachusetts banks’ ability to exercise similar interstate banking powers in other states depend upon the laws of those other states. The banking commissioners of the five New England States, including Massachusetts, Connecticut, Rhode Island, Vermont, New Hampshire and Maine, have entered into an agreement pursuant to which the supervision of interstate branches of a New England interstate bank is primarily the responsibility of the banking commissioner of the state in which the interstate bank maintains its headquarters. See also “—Federal Regulations—Interstate Branching” on page [#] for a discussion of federal laws governing interstate branching.

     Lending Activities. Massachusetts banking laws grant banks broad lending authority. However, with certain limited exceptions, total obligations of one borrower to a stock bank may not exceed 20.0% of the total of the capital stock, surplus account and undivided profits (for banks with capital of at least $500,000) and may not exceed 20.0% of the capital stock or 10.0% of the total of the capital stock, surplus account and undivided profits, whichever is greater (for all other banks).

     Dividends. A Massachusetts stock bank may declare from net profits cash dividends not more frequently than quarterly and non-cash dividends at any time. No dividends may be declared, credited or paid if the bank’s capital stock is impaired. The approval of the Massachusetts Commissioner of Banks is required if the total of all dividends declared in any calendar year exceeds the total of its net profits for that year combined with its retained net profits of the preceding two years. Net profits for this purpose means the remainder of all earnings from current operations plus actual recoveries on loans and investments and other assets after deducting from the total thereof all current operating expenses, actual losses, accrued dividends on preferred stock, if any, and all federal and state taxes.

     Regulatory Enforcement Authority. Any Massachusetts bank that does not operate in accordance with the regulations, policies and directives of the Massachusetts Commissioner of Banks may be subject to sanctions for non-compliance, including seizure of the property and business of the bank and suspension or revocation of its charter. The Massachusetts Commissioner of Banks may under certain circumstances suspend or remove officers or directors who have violated the law, conducted the bank’s business in a manner which is unsafe, unsound or contrary to the depositors’ interests or been negligent in the performance of their duties. In addition, upon finding that a bank has engaged in an unfair or deceptive act or practice, the Massachusetts Commissioner of Banks may issue an order to cease and desist and impose a fine on the bank concerned. Finally, Massachusetts consumer protection and civil rights statutes applicable to Benjamin Franklin Bank permit private individual and class action law suits and provide for the rescission of consumer transactions, including loans, and the recovery of statutory and punitive damages and attorneys’ fees in the case of certain violations or those statutes.

     Insurance Sales. Massachusetts banks may engage in insurance sales activities if the Massachusetts Commissioner of Banks has approved its plan of operation for insurance activities and it obtains a license from the Massachusetts Division of Insurance. A bank may be licensed directly or indirectly through an affiliate or a subsidiary corporation established for this purpose.

     DIF. All Massachusetts-chartered savings banks are required to be members of the Deposit Insurance Fund of the Depositors Insurance Fund of Massachusetts, a corporation that insures savings bank deposits in excess of federal deposit insurance coverage. The DIF is authorized to charge savings banks an annual assessment of up to 1/50th of 1.0% of a savings bank’s deposit balances in excess of amounts insured by the FDIC.

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Federal Regulations

     Capital Requirements. Under FDIC regulations, federally insured state-chartered banks that are not members of the Federal Reserve System (“state non-member banks”), such as Benjamin Franklin Bank and Chart Bank, are required to comply with minimum leverage capital requirements. For an institution determined by the FDIC to not be anticipating or experiencing significant growth and to be, in general, a strong banking organization rated composite 1 under the Uniform Financial Institutions Ranking System established by the Federal Financial Institutions Examination Council, the minimum capital leverage requirement is a ratio of Tier 1 capital to total assets of 3.0%. For all other institutions, the minimum leverage capital ratio is not less than 4.0%. Tier 1 capital is the sum of common stockholders’ equity, noncumulative perpetual preferred stock (including any related surplus) and minority investments in certain subsidiaries, less intangible assets (except for certain servicing rights and credit card relationships) and certain other specified items.

     The FDIC regulations require state non-member banks to maintain certain levels of regulatory capital in relation to regulatory risk-weighted assets. The ratio of regulatory capital to regulatory risk-weighted assets is referred to as a bank’s “risk-based capital ratio.” Risk-based capital ratios are determined by allocating assets and specified off-balance sheet items (including recourse obligations, direct credit substitutes and residual interests) to four risk-weighted categories ranging from 0.0% to 100.0%, with higher levels of capital being required for the categories perceived as representing greater risk. For example, under the FDIC’s risk-weighting system, cash and securities backed by the full faith and credit of the U.S. government are given a 0.0% risk weight, loans secured by one- to four-family residential properties generally have a 50.0% risk weight, and commercial loans have a risk weighting of 100.0%.

     State non-member banks must maintain a minimum ratio of total capital to risk-weighted assets of at least 8.0%, of which at least one-half must be Tier 1 capital. Total capital consists of Tier 1 capital plus Tier 2 or supplementary capital items, which include allowances for loan losses in an amount of up to 1.25% of risk-weighted assets, cumulative preferred stock and certain other capital instruments, and a portion of the net unrealized gain on equity securities. The includable amount of Tier 2 capital cannot exceed the amount of the institution’s Tier 1 capital. Banks that engage in specified levels of trading activities are subject to adjustments in their risk based capital calculation to ensure the maintenance of sufficient capital to support market risk.

     The Federal Deposit Insurance Corporation Improvement Act (the “FDICIA”) required each federal banking agency to revise its risk-based capital standards for insured institutions to ensure that those standards take adequate account of interest-rate risk, concentration of credit risk, and the risk of nontraditional activities, as well as to reflect the actual performance and expected risk of loss on multi-family residential loans. The FDIC, along with the other federal banking agencies, has adopted a regulation providing that the agencies will take into account the exposure of a bank’s capital and economic value to changes in interest rate risk in assessing a bank’s capital adequacy. The FDIC also has authority to establish individual minimum capital requirements in appropriate cases upon determination that an institution’s capital level is, or is likely to become, inadequate in light of the particular circumstances.

     As a bank holding company, Benjamin Franklin Bancorp is subject to capital adequacy guidelines for bank holding companies similar to those of the FDIC for state-chartered banks. On a pro forma consolidated basis, after the offering, Benjamin Franklin Bancorp’s pro forma stockholders’ equity will exceed these requirements.

     Standards for Safety and Soundness. As required by statute, the federal banking agencies adopted final regulations and Interagency Guidelines Establishing Standards for Safety and Soundness to implement safety and soundness standards. The guidelines set forth the safety and soundness standards that the federal banking agencies use to identify and address problems at insured depository institutions

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before capital becomes impaired. The guidelines address internal controls and information systems, internal audit system, credit underwriting, loan documentation, interest rate exposure, asset growth, asset quality, earnings and compensation, fees and benefits. Most recently, the agencies have established standards for safeguarding customer information. If the appropriate federal banking agency determines that an institution fails to meet any standard prescribed by the guidelines, the agency may require the institution to submit to the agency an acceptable plan to achieve compliance with the standard.

     Investment Activities. Since the enactment of FDICIA, all state-chartered FDIC insured banks, including savings banks, have generally been limited in their investment activities to principal and equity investments of the type and in the amount authorized for national banks, notwithstanding state law. FDICIA and the FDIC permit exceptions to these limitations. For example, state chartered banks may, with FDIC approval, continue to exercise state authority to invest in common or preferred stocks listed on a national securities exchange or the Nasdaq National Market and in the shares of an investment company registered under the Investment Company Act of 1940, as amended. The maximum permissible investment is 100.0% of Tier 1 Capital, as specified by the FDIC’s regulations, or the maximum amount permitted by Massachusetts law, whichever is less. Chart Bank received grandfathered authority from the FDIC to invest in listed stock and/or registered shares. Benjamin Franklin does not currently have authority to invest in equity securities. Such grandfathered authority may be terminated upon the FDIC’s determination that such investments pose a safety and soundness risk. In addition, the FDIC is authorized to permit such institutions to engage in state authorized activities or investments not permissible for national banks (other than non-subsidiary equity investments) if they meet all applicable capital requirements and it is determined that such activities or investments do not pose a significant risk to the Bank Insurance Fund. The FDIC has adopted revisions to its regulations governing the procedures for institutions seeking approval to engage in such activities or investments. The Gramm-Leach-Bliley Act of 1999 specifies that a nonmember bank may control a subsidiary that engages in activities as principal that would only be permitted for a national bank to conduct in a “financial subsidiary” if a bank meets specified conditions and deducts its investment in the subsidiary for regulatory capital purposes.

     Interstate Branching. Beginning June 1, 1997, the Interstate Banking Act permitted the responsible federal banking agencies to, under certain circumstances, approve acquisition transactions between banks located in different states, regardless of whether the acquisition would be prohibited under the law of one or both of the two states, unless the home state of one of the banks “opted out” by adopting a law that applies equally to all out-of-state banks and expressly prohibits merger transactions involving out-of-state banks. Interstate acquisitions of branches and de novo branching are permitted only if the law of the state in which the branch is located permits such acquisitions. Massachusetts permits such interstate branch acquisitions and de novo branching. See “—Massachusetts Bank Regulation—Interstate Branching” on page [#].

     Prompt Corrective Regulatory Action. Federal law requires, among other things, that federal bank regulatory authorities take “prompt corrective action” with respect to banks that do not meet minimum capital requirements. For these purposes, the law establishes five capital categories: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized.

     The FDIC has adopted regulations to implement the prompt corrective action legislation. An institution is deemed to be “well capitalized” if it has a total risk-based capital ratio of 10.0% or greater, a Tier 1 risk-based capital ratio of 6.0% or greater and a leverage ratio of 5.0% or greater. An institution is “adequately capitalized” if it has a total risk-based capital ratio of 8.0% or greater, a Tier 1 risk-based capital ratio of 4.0% or greater, and generally a leverage ratio of 4.0% or greater. An institution is “undercapitalized” if it has a total risk-based capital ratio of less than 8.0%, a Tier 1 risk-based capital ratio of less than 4.0%, or generally a leverage ratio of less than 4.0%. An institution is deemed to be “significantly undercapitalized” if it has a total risk-based capital ratio of less than 6.0%, a Tier 1 risk-

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based capital ratio of less than 3.0%, or a leverage ratio of less than 3.0%. An institution is considered to be “critically undercapitalized” if it has a ratio of tangible equity (as defined in the regulations) to total assets that is equal to or less than 2.0%. As of September 30, 2004, Benjamin Franklin Bank and Chart Bank were “well capitalized” institutions.

     “Undercapitalized” banks must adhere to growth, capital distribution (including dividend) and other limitations and are required to submit a capital restoration plan. A bank’s compliance with such a plan is required to be guaranteed by any company that controls the undercapitalized institution in an amount equal to the lesser of 5.0% of the institution’s total assets when deemed undercapitalized or the amount necessary to achieve the status of adequately capitalized. If an “undercapitalized” bank fails to submit an acceptable plan, it is treated as if it is “significantly undercapitalized.” “Significantly undercapitalized” banks must comply with one or more of a number of additional restrictions, including but not limited to an order by the FDIC to sell sufficient voting stock to become adequately capitalized, requirements to reduce total assets, cease receipt of deposits from correspondent banks or dismiss directors or officers, and restrictions on interest rates paid on deposits, compensation of executive officers and capital distributions by the parent holding company. “Critically undercapitalized” institutions are subject to additional measures including, subject to a narrow exception, the appointment of a receiver or conservator within 270 days after it obtains such status.

     Transactions with Affiliates. Transactions between banks and their affiliates are governed by Sections 23A and 23B of the Federal Reserve Act. An affiliate of a bank is any company or entity that controls, is controlled by or is under common control with the bank. In a holding company context, the parent bank holding company and any companies which are controlled by such parent holding company are affiliates of the bank. Generally, Sections 23A and 23B of the Federal Reserve Act (i) limit the extent to which the bank or its subsidiaries may engage in “covered transactions” with any one affiliate to an amount equal to 10.0% of such institution’s capital stock and surplus, and contain an aggregate limit on all such transactions with all affiliates to an amount equal to 20.0% of such institution’s capital stock and surplus and (ii) require that all such transactions be on terms substantially the same, or at least as favorable, to the institution or subsidiary as those provided to a non-affiliate. The term “covered transaction” includes the making of loans, purchase of assets, issuance of a guarantee and other similar transactions. In addition, loans or other extensions of credit by the financial institution to the affiliate are required to be collateralized in accordance with the requirements set forth in Section 23A of the Federal Reserve Act.

     The Gramm-Leach-Bliley Act amended several provisions of section 23A and 23B of the Federal Reserve Act. The amendments provide that so-called “financial subsidiaries” of banks are treated as affiliates for purposes of sections 23A and 23B of the Federal Reserve Act, but the amendment provides that (i) the 10.0% capital limit on transactions between the bank and such financial subsidiary as an affiliate is not applicable, and (ii) the investment by the bank in the financial subsidiary does not include retained earnings in the financial subsidiary. Certain anti-evasion provisions have been included that relate to the relationship between any financial subsidiary of a bank and sister companies of the bank: (1) any purchase of, or investment in, the securities of a financial subsidiary by any affiliate of the parent bank is considered a purchase or investment by the bank; or (2) if the Federal Reserve Board determines that such treatment is necessary, any loan made by an affiliate of the parent bank to the financial subsidiary is to be considered a loan made by the parent bank.

     Effective April 1, 2003, the Federal Reserve Board adopted Regulation W that deals with the provisions of Sections 23A and 23B. The regulation unifies and updates staff interpretations issued over the years, incorporates several new interpretations and provisions (such as to clarify when transactions with an unrelated third party will be attributed to an affiliate), and addresses new issues arising as a result of the expanded scope of nonbanking activities engaged in by banks and bank holding companies in recent years and authorized for financial holding companies under the Gramm-Leach-Bliley Act.

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     In addition, Sections 22(h) and (g) of the Federal Reserve Act place restrictions on loans to executive officers, directors and principal stockholders. Under Section 22(h) of the Federal Reserve Act, loans to a director, an executive officer and to a greater than 10.0% stockholder of a financial institution, and certain affiliated interests of these, may not exceed, together with all other outstanding loans to such person and affiliated interests, the financial institution’s loans to one borrower limit, generally equal to 15.0% of the institution’s unimpaired capital and surplus. Section 22(h) of the Federal Reserve Act also requires that loans to directors, executive officers and principal stockholders be made on terms substantially the same as offered in comparable transactions to other persons and also requires prior board approval for certain loans. In addition, the aggregate amount of extensions of credit by a financial institution to insiders cannot exceed the institution’s unimpaired capital and surplus. Furthermore, Section 22(g) of the Federal Reserve Act places additional restrictions on loans to executive officers.

     Enforcement. The FDIC has extensive enforcement authority over insured savings banks, including Benjamin Franklin Bank and Chart Bank. This enforcement authority includes, among other things, the ability to assess civil money penalties, issue cease and desist orders and remove directors and officers. In general, these enforcement actions may be initiated in response to violations of laws and regulations and unsafe or unsound practices. The FDIC has authority under Federal law to appoint a conservator or receiver for an insured bank under limited circumstances. The FDIC is required, with certain exceptions, to appoint a receiver or conservator for an insured state non-member bank if that bank was “critically undercapitalized” on average during the calendar quarter beginning 270 days after the date on which the institution became “critically undercapitalized.” The FDIC may also appoint itself as conservator or receiver for an insured state non-member institution under specific circumstances on the basis of the institution’s financial condition or upon the occurrence of other events, including: (1) insolvency; (2) substantial dissipation of assets or earnings through violations of law or unsafe or unsound practices; (3) existence of an unsafe or unsound condition to transact business; and (4) insufficient capital, or the incurring of losses that will deplete substantially all of the institution’s capital with no reasonable prospect of replenishment without federal assistance.

     Insurance of Deposit Accounts. The FDIC has adopted a risk-based insurance assessment system. The FDIC assigns an institution to one of three capital categories based on the institution’s financial condition consisting of (1) well capitalized, (2) adequately capitalized or (3) undercapitalized, and one of three supervisory subcategories within each capital group. The supervisory subgroup to which an institution is assigned is based on a supervisory evaluation provided to the FDIC by the institution’s primary federal regulator and information which the FDIC determines to be relevant to the institution’s financial condition and the risk posed to the deposit insurance funds. An institution’s assessment rate depends on the capital category and supervisory category to which it is assigned. Assessment rates for insurance fund deposits currently range from 0 basis points for the strongest institution to 27 basis points for the weakest. Bank Insurance Fund members are also required to assist in the repayment of bonds issued by the Financing Corporation in the late 1980’s to recapitalize the Federal Savings and Loan Insurance Corporation. For the nine months ended September 30, 2004 and 2003, the total FDIC assessment was $45,958 and $45,157, respectively, for Benjamin Franklin Bank, and $19,445 and $18,540, respectively for Chart Bank. The FDIC is authorized to raise the assessment rates. The FDIC has exercised this authority several times in the past and may raise insurance premiums in the future. If such action is taken by the FDIC, it could have an adverse effect on the earnings of Benjamin Franklin Bank.

     The FDIC may terminate insurance of deposits if it finds that the institution is in an unsafe or unsound condition to continue operations, has engaged in unsafe or unsound practices, or has violated any applicable law, regulation, rule, order or condition imposed by the FDIC. The managements of Benjamin Franklin Bank and Chart Bank do not know of any practice, condition or violation that might lead to termination of deposit insurance.

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Federal Reserve System

     The Federal Reserve Board regulations require depository institutions to maintain non-interest-earning reserves against their transaction accounts (primarily NOW and regular checking accounts). The Federal Reserve Board regulations generally require that reserves be maintained against aggregate transaction accounts as follows: for that portion of transaction accounts aggregating $42.1 million or less (which may be adjusted by the Federal Reserve Board) the reserve requirement is 3.0%; and for amounts greater than $42.1 million, 10.0% (which may be adjusted by the Federal Reserve Board between 8.0% and 14.0%), against that portion of total transaction accounts in excess of $42.1 million. The first $6.0 million of otherwise reservable balances (which may be adjusted by the Federal Reserve Board) are exempted from the reserve requirements. Benjamin Franklin Bank and Chart Bank are in compliance with these requirements.

Federal Home Loan Bank System

     Benjamin Franklin Bank and Chart Bank are members of the Federal Home Loan Bank System, which consists of 12 regional Federal Home Loan Banks. The Federal Home Loan Bank provides a central credit facility primarily for member institutions. Members of the Federal Home Loan Bank are required to acquire and hold shares of capital stock in the Federal Home Loan Bank in an amount at least equal to 1.0% of the aggregate principal amount of its unpaid residential mortgage loans and similar obligations at the beginning of each year, or 1/20 of its advances (borrowings) from the Federal Home Loan Bank, whichever is greater. Benjamin Franklin Bank was in compliance with this requirement with an investment in Federal Home Loan Bank stock at September 30, 2004 of $4.3 million. At September 30, 2004, Benjamin Franklin Bank had $75.0 million in Federal Home Loan Bank advances. Chart Bank was in compliance with this requirement with such an investment at September 30, 2004 of $1.7 million. At September 30, 2004, Chart Bank had $22.0 million in Federal Home Loan Bank advances.

     The Federal Home Loan Banks are required to provide funds for certain purposes including the resolution of insolvent thrifts in the late 1980s and to contributing funds for affordable housing programs. These requirements could reduce the amount of dividends that the Federal Home Loan Banks pay to their members and result in the Federal Home Loan Banks imposing a higher rate of interest on advances to their members. If dividends were reduced, or interest on future Federal Home Loan Bank advances increased, a member bank affected by such reduction or increase would likely experience a reduction in its net interest income. Recent legislation has changed the structure of the Federal Home Loan Banks’ funding obligations for insolvent thrifts, revised the capital structure of the Federal Home Loan Banks and implemented entirely voluntary membership for Federal Home Loan Banks. For the nine months ended September 30, 2004 and 2003, cash dividends from the Federal Home Loan Bank to Benjamin Franklin Bank amounted to approximately $87,000 and $72,000, respectively, and to Chart Bank, approximately $22,917 and $24,149. There can be no assurance that such dividends will continue in the future. Further, there can be no assurance that the impact of recent or future legislation on the Federal Home Loan Banks also will not cause a decrease in the value of the Federal Home Loan Bank stock held by Benjamin Franklin Bank and Chart Bank.

Holding Company Regulation

     General. As a bank holding company, Benjamin Franklin Bancorp is subject to comprehensive regulation and regular examinations by the Federal Reserve Board. The Federal Reserve Board also has extensive enforcement authority over bank holding companies, including, among other things, the ability to assess civil money penalties, to issue cease and desist or removal orders and to require that a holding company divest subsidiaries (including its bank subsidiaries). In general, enforcement actions may be initiated for violations of law and regulations and unsafe or unsound practices.

     As a bank holding company, Benjamin Franklin Bancorp must obtain the approval of the Federal Reserve Board before: (i) acquiring, directly or indirectly, ownership or control of any voting shares of

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another bank or bank holding company if, after such acquisition, it would own or control more than 5.0% of such shares (unless it already owns or controls the majority of such shares); (ii) acquiring all or substantially all of the assets of another bank or bank holding company; or (iii) merging or consolidating with another bank holding company. In addition, Benjamin Franklin Bancorp must obtain the approval of the Massachusetts Board of Bank Incorporation before becoming a “bank holding company” for Massachusetts law purposes. Under Massachusetts law, a bank holding company is generally defined as a company that directly or indirectly owns, controls or holds with power to vote 25.0% of the voting stock of each of two or more banking institutions.

     Under Federal Reserve Board policy, a bank holding company must serve as a source of strength for its subsidiary bank. Under this policy, the Federal Reserve Board may require, and has required in the past, a holding company to contribute additional capital to an undercapitalized subsidiary bank.

     The Banking Holding Company Act also prohibits a bank holding company, with certain exceptions, from acquiring direct or indirect ownership or control of more than 5.0% of the voting shares of any company which is not a bank or bank holding company, or from engaging directly or indirectly in activities other than those of banking, managing or controlling banks, or providing services for its subsidiaries. The principal exceptions to these prohibitions involve certain non-bank activities which, by statute or by Federal Reserve Board regulation or order, have been identified as activities closely related to the business of banking or managing or controlling banks. The list of activities permitted by the Federal Reserve Board includes, among other things: (i) operating a savings institution, mortgage company, finance company, credit card company or factoring company; (ii) performing certain data processing operations; (iii) providing certain investment and financial advice; (iv) underwriting and acting as an insurance agent for certain types of credit-related insurance; (v) leasing property on a full-payout, non-operating basis; (vi) selling money orders, travelers’ checks and United States Savings Bonds; (vii) real estate and personal property appraising; (viii) providing tax planning and preparation services; (ix) financing and investing in certain community development activities; and (x) subject to certain limitations, providing securities brokerage services for customers. Benjamin Franklin Bancorp has no present plans to engage in any of these activities.

     Dividends. The Federal Reserve Board has issued a policy statement on the payment of cash dividends by bank holding companies, which expresses the Federal Reserve Board’s view that a bank holding company should pay cash dividends only to the extent that the holding company’s net income for the past year is sufficient to cover both the cash dividends and a rate of earnings retention that is consistent with the holding company’s capital needs, asset quality and overall financial condition. The Federal Reserve Board also indicated that it would be inappropriate for a company experiencing serious financial problems to borrow funds to pay dividends. Furthermore, under the prompt corrective action regulations adopted by the Federal Reserve Board, the Federal Reserve Board may prohibit a bank holding company from paying any dividends if the holding company’s bank subsidiary is classified as “undercapitalized.” See “Regulatory Capital Compliance” on page [#].

     Bank holding companies are required to give the Federal Reserve Board prior written notice of any purchase or redemption of its outstanding equity securities if the gross consideration for the purchase or redemption, when combined with the net consideration paid for all such purchases or redemptions during the preceding 12 months, is equal to 10.0% or more of the consolidated net worth of the bank holding company. The Federal Reserve Board may disapprove such a purchase or redemption if it determines that the proposal would constitute an unsafe or unsound practice or would violate any law, regulation, Federal Reserve Board order or any condition imposed by, or written agreement with, the Federal Reserve Board. This notification requirement does not apply to any company that meets the well-capitalized standard for commercial banks, is “well managed” within the meaning of the Federal Reserve Board regulations and is not subject to any unresolved supervisory issues.

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     Financial Modernization. The Gramm-Leach-Bliley Act permits greater affiliation among banks, securities firms, insurance companies, and other companies under a type of financial services company known as a “financial holding company.” A financial holding company essentially is a bank holding company with significantly expanded powers. Financial holding companies are authorized by statute to engage in a number of financial activities previously impermissible for bank holding companies, including securities underwriting, dealing and market making; sponsoring mutual funds and investment companies; insurance underwriting and agency; and merchant banking activities. The act also permits the Federal Reserve Board and the Treasury Department to authorize additional activities for financial holding companies if they are “financial in nature” or “incidental” to financial activities. A bank holding company may become a financial holding company if each of its subsidiary banks is well capitalized, well managed, and has at least a “satisfactory” Community Reinvestment Act rating. A financial holding company must provide notice to the Federal Reserve Board within 30 days after commencing activities previously determined by statute or by the Federal Reserve Board and Department of the Treasury to be permissible. Benjamin Franklin Bancorp has not submitted notice to the Federal Reserve Board of its intent to be deemed a financial holding company. However, it is not precluded from submitting a notice in the future should it wish to engage in activities only permitted to financial holding companies.

Miscellaneous Regulation

     Community Reinvestment Act. Under the Community Reinvestment Act (CRA), as amended as implemented by FDIC regulations, a bank has a continuing and affirmative obligation, consistent with its safe and sound operation, to help meet the credit needs of its entire community, including low and moderate income neighborhoods. The CRA does not establish specific lending requirements or programs for financial institutions nor does it limit an institution’s discretion to develop the types of products and services that it believes are best suited to its particular community, consistent with the CRA. The CRA does require the FDIC, in connection with its examination of a bank, to assess the institution’s record of meeting the credit needs of its community and to take such record into account in its evaluation of certain applications by such institution, including applications to acquire branches and other financial institutions. The CRA requires the FDIC to provide a written evaluation of an institution’s CRA performance utilizing a four-tiered descriptive rating system. Benjamin Franklin Bank’s latest FDIC CRA rating was “satisfactory.” Chart Bank’s most recent CRA rating was “satisfactory.”

     Massachusetts has its own statutory counterpart to the CRA which is also applicable to Benjamin Franklin Bank and Chart Bank. The Massachusetts version is generally similar to the CRA but utilizes a five-tiered descriptive rating system. Massachusetts law requires the Massachusetts Commissioner of Banks to consider, but not be limited to, a bank’s record of performance under Massachusetts law in considering any application by the bank to establish a branch or other deposit-taking facility, to relocate an office or to merge or consolidate with or acquire the assets and assume the liabilities of any other banking institution. Benjamin Franklin Bank’s most recent rating under Massachusetts law was “high satisfactory” and Chart Bank’s was “satisfactory.”

     Consumer Protection And Fair Lending Regulations. Massachusetts savings banks are subject to a variety of federal and Massachusetts statutes and regulations that are intended to protect consumers and prohibit discrimination in the granting of credit. These statutes and regulations provide for a range of sanctions for non-compliance with their terms, including imposition of administrative fines and remedial orders, and referral to the Attorney General for prosecution of a civil action for actual and punitive damages and injunctive relief. Certain of these statutes authorize private individual and class action lawsuits and the award of actual, statutory and punitive damages and attorneys’ fees for certain types of violations.

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DESCRIPTION OF CAPITAL STOCK OF BENJAMIN FRANKLIN BANCORP

General

     Upon completion of the conversion, Benjamin Franklin Bancorp will be authorized to issue up to 75 million shares of common stock. As of the date of this Prospectus, none of these shares has been issued. Benjamin Franklin Bancorp currently expects to issue between 4,250,000 and 5,750,000 shares of common stock in the conversion, with an adjusted maximum of 6,612,500 shares, and 2,401,575 shares of common stock in the merger (based on 1,420,000 outstanding shares of Chart Bank common stock, which is exclusive of options to purchase 137,000 shares of Chart Bank common stock outstanding as of Sept. 30, 2004).

Benjamin Franklin Bancorp Common Stock

     General. Each issued and outstanding share of Benjamin Franklin Bancorp common stock will have the same rights as, and will be identical in all respects with, each other share of common stock. Upon payment of the purchase price for the conversion shares in accordance with the plan of conversion, and upon issuance of the exchange shares in accordance with the provisions of the merger agreement, all such shares will be duly authorized, fully paid, validly issued and non-assessable.

     Voting Rights. Each holder of Benjamin Franklin Bancorp common stock will be entitled to one vote for each share of common stock held. Holders of common stock will not have cumulative voting rights in connection with the election of directors.

     Dividends. Holders of Benjamin Franklin Bancorp common stock will be entitled to receive and share equally in such dividends as the board of directors of Benjamin Franklin Bancorp may declare out of funds legally available for such payments. If Benjamin Franklin Bancorp issues preferred stock, holders of such stock may have a priority over holders of common stock with respect to the payment of dividends. See “—Preferred Stock” on page [#]. State and federal laws and regulations place limitations on the payment of dividends. See “Our Policy Regarding Dividends” on page [#].

     Liquidation or Dissolution. In the event of a liquidation or dissolution of Benjamin Franklin Bancorp, holders of Benjamin Franklin Bancorp common stock will be entitled to receive, after payment or provision for payment of all debts and liabilities of Benjamin Franklin Bancorp (including all deposits in Benjamin Franklin Bank and accrued interest thereon) and after distribution of the liquidation account established upon the completion of the conversion for the benefit of eligible account holders and supplemental eligible account holders who continue their deposit accounts at Benjamin Franklin Bank, all assets of Benjamin Franklin Bancorp available for distribution. If Benjamin Franklin Bancorp issues preferred stock, holders of such stock may have a senior interest over holders of common stock in such a distribution.

     No Preemptive or Redemption Rights. Holders of Benjamin Franklin Bancorp common stock will not have preemptive rights with respect to any shares of the capital stock of Benjamin Franklin Bancorp that may be issued. Shares of Benjamin Franklin Bancorp common stock will not be subject to call for redemption.

Preferred Stock

     Benjamin Franklin Bancorp’s board of directors may, without stockholder approval but subject to certain regulatory approvals, reclassify any unissued shares of common stock into one or more series of preferred stock and designate and issue one or more series of preferred stock, establish the number of shares in each such series, fix and state the voting powers, designations, preferences and the relative or special rights or privileges of the shares of any series so established and the qualifications thereon without further vote or action by the stockholders.

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     Any issuance of preferred stock could have an adverse effect on the voting and other rights of holders of common stock. Each series of preferred stock issued after the conversion may rank senior to             shares of common stock with respect to dividend rights and liquidation preferences, may have full, limited or no voting rights and may be convertible into shares of common stock.

RESTRICTIONS ON ACQUISITION OF BENJAMIN FRANKLIN BANCORP
AND BENJAMIN FRANKLIN BANK

General

     Benjamin Franklin Bancorp’s articles of organization and by-laws, which will become effective upon completion of the conversion, contain certain provisions relating to corporate governance and rights of stockholders that might discourage future takeover attempts by impeding efforts to acquire Benjamin Franklin Bancorp or stock purchases in furtherance of such an acquisition. Such provisions will also make it more difficult to remove the board and Benjamin Franklin Bancorp’s management. Certain state and federal laws and Benjamin Franklin Bank’s employee stock ownership plan could have a similar effect.

     Although the board of directors of Benjamin Franklin Bank and the board of trustees of Benjamin Franklin Bancorp are not aware of any effort that might be made to obtain control of Benjamin Franklin Bancorp following the conversion, the boards believe, as discussed below, that it is appropriate to include certain provisions in the articles of organization and by-laws to protect the interests of Benjamin Franklin Bancorp and its stockholders from takeovers that the board might conclude are not in the best interest of Benjamin Franklin Bank, Benjamin Franklin Bancorp or Benjamin Franklin Bancorp’s stockholders.

     These provisions will also increase protections available to Benjamin Franklin Bancorp against transactions that, although not resulting in an acquisition of a majority of Benjamin Franklin Bancorp’s capital stock, nevertheless may harm Benjamin Franklin Bancorp and its stockholders by disrupting Benjamin Franklin Bank’s operations and management and by causing Benjamin Franklin Bancorp to incur substantial expenses.

     The following is a general summary of the material provisions of Benjamin Franklin Bancorp’s articles and by-laws and of certain provisions of the employee stock ownership plan and certain laws that may have an “anti-takeover” effect. The descriptions are necessarily general and, with respect to provisions contained in the articles and by-laws, reference should be made to the document in question, each of which is part of Benjamin Franklin Bancorp’s application to the Commissioner and Registration Statement on Form S-1 filed with the SEC. See “Additional Information” on page [#].

Certain Provisions of Benjamin Franklin Bancorp’s Articles and By-Laws and the Massachusetts Business Corporation Law

     Directors. The articles of organization and by-laws of Benjamin Franklin Bancorp contain certain provisions that may make it difficult to change majority control of Benjamin Franklin Bancorp’s board of directors. The Massachusetts Business Corporation Act also contains provisions similar to certain of the provisions of the articles, as described below.

     Benjamin Franklin Bancorp’s articles, as well as Section 8.06(b) of the Massachusetts Business Corporation Act, require that Benjamin Franklin Bancorp have three classes of directors elected for three-year staggered terms, so that ordinarily no more than approximately one-third of Benjamin Franklin Bancorp’s directors will stand for election in any one year. Thus, it would take two annual elections to replace a majority of Benjamin Franklin Bancorp’s board. The stockholders do not have cumulative voting rights in the election of directors.

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     Benjamin Franklin Bancorp’s articles, as well as Section 8.06(e) of the Massachusetts Business Corporation Act, also provide that any vacancy occurring in the board of directors, including vacancies resulting from an increase in the number of directors, may be filled only by a vote of a majority of the directors (even if such directors do not constitute a quorum). The articles further provide that if, at the time a board vacancy occurs, there is an interested stockholder, the vacancy may be filled only by vote of a majority of the independent directors then in office. Since Section 8.06(e) does not include a similar provision requiring the vote of the independent directors if there is an interested stockholder, this provision of the articles will not be effective unless the board of directors or the shareholders by a two-thirds vote elect to opt out of Section 8.06(b) of the Massachusetts Business Corporation Act. In addition, the by-laws impose certain advance notice and informational requirements on the nomination by stockholders of candidates for election to the board of directors. See "—Certain Provisions of Benjamin Franklin Bancorp’s Articles and By-laws—Stockholder Proposals and Director Nominations” on page [#].

     Finally, Benjamin Franklin Bancorp’s articles, as well as Section 8.06(d) of the Massachusetts Business Corporation Act, provide that directors may be removed only for cause and only by the shareholders. The articles require a two-thirds vote of the shareholders to remove a director, while Section 8.06(d) requires only a majority vote of the shareholders. The majority vote provision contained in Section 8.06(d) will govern (rather than the two-thirds vote provision contained in the articles) unless the board of directors or the shareholders by a two-thirds vote elect to opt out of Section 8.06(b) of the Massachusetts Business Corporation Act.

     The board of directors has not elected to opt out of 8.06(b) of the Massachusetts Business Corporation Act, but it could choose to do so at any time.

     Definitions of “independent director” and “interested stockholder” appear in the last subsection of “—Certain Provisions of Benjamin Franklin Bancorp’s Articles and By-laws” on page [#].

     Meetings of Stockholders. The articles and by-laws provide that a special meeting of stockholders may be called at any time by the president, a majority of the directors then in office (unless at the time there is an interested shareholder, in which case such call by the board of directors shall also require the affirmative vote of a majority of the independent directors then in office), or by the secretary upon the written request of one or more stockholders who hold at least 80% in interest of the capital stock entitled to vote at such meeting. Only those matters set forth in the call of the special meeting may be considered or acted upon at such meeting, unless otherwise provided by law. With respect to annual meetings of stockholders, the by-laws impose certain advance notice and informational requirements for any business that a stockholder may wish to propose for consideration at such a meeting. See “—Certain Provisions of Benjamin Franklin Bancorp’s Articles and By-laws—Stockholder Proposals and Director Nominations” on page [#]. The by-laws provide that any action by the stockholders may be taken without a meeting if all stockholders entitled to vote on the matter consent to such action in writing.

     Authorized Stock. The articles authorize the board of directors to issue any of the 75 million shares of Benjamin Franklin Bancorp common stock not issued in the conversion and the merger that are authorized but unissued. The board of directors may, without stockholder approval but subject to certain regulatory approvals, reclassify any unissued shares of common stock into one or more series of preferred stock and designate and issue one or more series of preferred stock, establish the number of shares in each such series, fix and state the voting powers, designations, preferences and the relative or special rights or privileges of the shares of any series so established and the qualifications thereon without further vote or action by the stockholders. In the event of a proposed merger, tender offer or other attempt to gain control of Benjamin Franklin Bancorp that the board of directors does not approve, it might be possible for the board of directors to authorize the issuance of a series of preferred stock with rights and preferences that might impede the completion of such a transaction. Benjamin Franklin Bancorp has no present plans or understandings for the issuance of any shares of preferred stock.

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     Vote Required to Approve Business Combinations Involving Interested Stockholders. The articles contain a so-called “fair price” provision pursuant to which certain mergers, acquisitions, stock issuances, dispositions of assets, liquidations or recapitalizations (these transactions are referred to as “business combinations”) involving an interested stockholder and Benjamin Franklin Bancorp or any subsidiary would require stockholder approval by the affirmative vote of holders of at least 75.0% of the outstanding shares of Benjamin Franklin Bancorp entitled to vote in elections of directors. The 75.0% vote is not required if the business combination is approved by two-thirds of the independent directors then in office or if certain procedures and price requirements are met. An affirmative vote of the holders of at least 75.0% of the outstanding voting stock is required to amend or repeal, or adopt any provisions inconsistent with, the fair price provision.

     Vote Required for Certain Transactions. The articles further provide that, unless a higher percentage vote is required by law or the fair price provision of the articles, any

  •   sale, lease or exchange of all or substantially all of Benjamin Franklin Bancorp’s property or assets, including goodwill, or
 
  •   the merger, share exchange or consolidation of Benjamin Franklin Bancorp with or into any other entity

must be approved by an affirmative vote of at least two-thirds of the total votes that may be cast by Benjamin Franklin Bancorp’s stockholders on such a transaction. However, only a majority vote of Benjamin Franklin Bancorp’s stockholders is necessary if the transaction has been recommended to the stockholders for approval by two-thirds of the directors then in office (unless there is an interested stockholder, in which case the recommendation to stockholders must also be approved by the vote of a majority of the independent directors then in office).

     Restrictions on Acquisitions of Securities. The articles provide that, for a period of five years following the date of completion of Benjamin Franklin Bancorp’s conversion from mutual to stock form, no person may directly or indirectly offer to acquire or acquire the beneficial ownership of more than 10.0% of the issued and outstanding voting stock of Benjamin Franklin Bancorp. Shares acquired in excess of this limitation will not be entitled to vote or to take other stockholder action or to be counted in determining the total number of outstanding shares for purposes of any matter involving stockholder action, and such shares may be required to be sold through an independent trustee. The foregoing provision of the articles does not apply to:

  •   Benjamin Franklin Bancorp or any subsidiary or any pension, profit-sharing, stock bonus or other compensation plan maintained by Benjamin Franklin Bancorp or by a member of a controlled group of corporations or trades or businesses of which Benjamin Franklin Bancorp is a member for the benefit of the employees of Benjamin Franklin Bancorp or any subsidiary, or any trust or custodial arrangement established in connection with any such plan;
 
  •   any offer or acquisition of shares of voting stock that has been approved in advance by an affirmative vote of not less than two-thirds (2/3) of the directors then in office (plus an affirmative vote of two-thirds (2/3) of the independent directors then in office if there is an interested stockholder at the time of the offer or acquisition);
 
  •   any offer with a view toward public resale made exclusively to Benjamin Franklin Bancorp by underwriters or a selling group acting on its behalf; or

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  •   a corporate reorganization without a change in the respective beneficial ownership interests of Benjamin Franklin Bancorp’s stockholders other than pursuant to the exercise of any dissenters’ appraisal rights.

     Provisions for Amendment of Articles and By-laws. The articles provide that, in general, amendment of the articles and the by-laws requires the vote of 75.0% of the votes eligible to be cast by Benjamin Franklin Bancorp’s stockholders or, if two-thirds of the independent directors vote to recommend that the stockholders approve such amendment, the vote of a majority of the votes eligible to be cast by Benjamin Franklin Bancorp’s stockholders . In addition, any provision of the articles that requires a greater than majority vote of stockholders can only be amended by such greater vote. In addition, the directors may amend the by-laws without stockholder approval by a majority vote (plus an affirmative vote of two-thirds of the independent directors if there is an interested stockholder).

     Stockholder Proposals and Director Nominations. Stockholders may submit proposals for inclusion on the agenda of an annual meeting of stockholders, and may submit nominations for election to the board of directors at an annual meeting, only by delivering a notice thereof to the secretary of Benjamin Franklin Bancorp at least 120 days but not more than 150 days in advance of the first anniversary of the date of the proxy statement for the previous year’s annual meeting (for the first annual meeting following the conversion, the deadline is ten days after the day on which notice of the date of the scheduled annual meeting is publicly disclosed).

     The stockholder notice must:

  •   state the stockholder’s name, the name of other stockholders who support the proposal or nominee and the class and number of             shares owned by them,
 
  •   in the case of a proposal, describe the matter proposed and the reason for considering it at the annual meeting and must set forth any financial interest that the proposing stockholder has in the proposal, and
 
  •   in the case of a nomination, the name, age, business address and residence address, principal occupation or employment of the nominee, the class and number of shares owned by the nominee, and any other information relating to the nominee that is required under the securities laws to be disclosed in solicitations of proxies with respect to nominees for election as directors, including, but not limited to, the written consent of the nominee to serve as a director if elected.

     The board of directors may reject a stockholder’s proposal or nomination if the stockholder does not fully and timely comply with the foregoing notice requirement.

     Purpose and Takeover Defensive Effects of Articles and By-Laws. The boards of Benjamin Franklin Bancorp and Benjamin Franklin Bank believe that the provisions described above are prudent and will reduce Benjamin Franklin Bancorp’s vulnerability to takeover attempts and to certain other transactions that have not been negotiated with and approved by Benjamin Franklin Bancorp’s board of directors. These provisions will also assist Benjamin Franklin Bancorp and Benjamin Franklin Bank in the orderly deployment of the offering proceeds into productive assets during the initial period after the offering. The boards believe these provisions are in the best interests of Benjamin Franklin Bank, Benjamin Franklin Bancorp and its stockholders. Attempts to acquire control of financial institutions and their holding companies have become increasingly common. Takeover attempts that have not been negotiated with and approved by boards of directors present to stockholders the risk of a takeover on terms that may be less favorable than might otherwise be available. A transaction that is negotiated and approved by the board of directors of Benjamin Franklin Bancorp, on the other hand, can be carefully

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planned and undertaken at an opportune time in order to obtain maximum value for Benjamin Franklin Bancorp and its stockholders, with due consideration given to matters such as the management and business of the acquiring corporation and maximum strategic development of Benjamin Franklin Bancorp’s assets.

     An unsolicited takeover proposal can seriously disrupt the business and management of a corporation and cause it great expense. Although a tender offer or other takeover attempt may be made at a price substantially above then-current market prices, such offers are sometimes made for less than all of the outstanding shares of a target company. As a result, stockholders may be presented with the alternative of partially liquidating their investment at a time that may be disadvantageous or retaining their investment in an enterprise that is under different management and the objectives of which may not be similar to those of the remaining stockholders.

     Potential Anti-Takeover Effects. Despite the belief of Benjamin Franklin Bank and Benjamin Franklin Bancorp as to the benefits to stockholders of the provisions described above, these provisions will have the effect of discouraging any takeover attempt that would not be approved either by regulatory policy or by Benjamin Franklin Bancorp’s board of directors but pursuant to which stockholders may receive a substantial premium for their shares over then-current market prices. As a result, stockholders who might desire to participate in such a transaction may not have any opportunity to do so. Such provisions will also make it more difficult to remove the board and Benjamin Franklin Bancorp’s management. The Boards of Benjamin Franklin Bank and Benjamin Franklin Bancorp, however, have concluded that the potential benefits outweigh the possible disadvantages.

     Definition of “Interested Stockholder” and “Independent Director.” An “interested stockholder” is any person (other than Benjamin Franklin Bancorp, any direct or indirect subsidiary of Benjamin Franklin Bancorp or any employee stock ownership plan formed by Benjamin Franklin Bancorp) who or which:

  •   is the beneficial owner, directly or indirectly, of 10.0% or more of the voting power of the outstanding voting stock of Benjamin Franklin Bancorp;
 
  •   is an “affiliate” of Benjamin Franklin Bancorp and at any time within the two-year period immediately prior to the date in question was the beneficial owner, directly or indirectly, of 10.0% or more of the voting power of the then outstanding voting stock of Benjamin Franklin Bancorp; or
 
  •   is an assignee of or has otherwise succeeded to any shares of voting stock of Benjamin Franklin Bancorp that were at any time within the two-year period immediately prior to the date in question beneficially owned by any interested stockholder, if such assignment or succession has occurred in the course of a transaction or series of transactions not involving a public offering within the meaning of the Securities Act of 1933 and was not approved by two-thirds (2/3) of the independent directors.

An “independent director” is defined in Benjamin Franklin Bancorp’s articles of organization as any director of Benjamin Franklin Bancorp at any time when there is no interested stockholder and, when there is an interested stockholder, any director who

  •   is not, and was not at any time during the two-year period immediately prior to the date in question, an affiliate or associate of an interested stockholder, and
 
  •   is not an employee of Benjamin Franklin Bancorp or any of its affiliates.

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Employee Stock Ownership Plan

     The Benjamin Franklin Bank employee stock ownership plan, which expects to purchase 8.0% of the shares issued in the offering, including shares issued to the Benjamin Franklin Bank Charitable Foundation, contains certain provisions permitting participating employees to direct the voting of shares held in the plan. Such provisions may be considered to have anti-takeover effects. See “Management of Benjamin Franklin Bancorp and Benjamin Franklin Bank—Benefit Plans—Employee Stock Ownership Plan” on page [#].

Statutory and Regulatory Restrictions

     Federal Change in Bank Control Act. Federal law provides that no person, acting directly or indirectly or through or in concert with one or more other persons, may acquire control of a bank holding company unless the Federal Reserve Board has been given 60 days prior written notice. For this purpose, the term “control” means the acquisition of the ownership, control or holding of the power to vote 25.0% or more of any class of a bank holding company’s voting stock, and the term “person” includes an individual, corporation, partnership, and various other entities. In addition, a person is presumed to acquire control if the person acquires the ownership, control or holding of the power to vote of 10.0% or more of any class of the holding company’s voting stock if

  •   the bank holding company’s shares are registered pursuant to Section 12 of the Exchange Act, or
 
  •   no other person will own, control or hold the power to vote a greater percentage of that class of voting securities.

Accordingly, the prior approval of the Federal Reserve Board would be required before any person could acquire 10.0% or more of the common stock of Benjamin Franklin Bancorp.

     The Federal Reserve Board may prohibit an acquisition of control if:

  •   it would result in a monopoly or substantially lessen competition;
 
  •   the financial condition of the acquiring person might jeopardize the financial stability of the institution; or
 
  •   the competence, experience or integrity of the acquiring person indicates that it would not be in the interest of the depositors or of the public to permit the acquisition of control by such person.

     Federal Bank Holding Company Act. Federal law provides that no company may acquire control of a bank directly or indirectly without the prior approval of the Federal Reserve Board. Any company that acquires control of a bank becomes a “bank holding company” subject to registration, examination and regulation by the Federal Reserve Board. Pursuant to federal regulations, the term “company” is defined to include banks, corporations, partnerships, associations, and certain trusts and other entities, and “control” of a bank is deemed to exist if a company has voting control, directly or indirectly of at least 25.0% of any class of a bank’s voting stock, and may be found to exist if a company controls in any manner the election of a majority of the directors of the bank or has the power to exercise a controlling influence over the management or policies of the bank. In addition, a bank holding company must obtain Federal Reserve Board approval prior to acquiring voting control of more than 5.0% of any class of voting stock of a bank or another bank holding company.

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     An acquisition of control of a bank that requires the prior approval of the Federal Reserve Board under the Bank Holding Company Act is not subject to the notice requirements of the Change in Bank Control Act. Accordingly, the prior approval of the Federal Reserve Board under the Bank Holding Company Act would be required

  •   before any bank holding company could acquire 5.0% or more of the common stock of Benjamin Franklin Bancorp and
 
  •   before any other company could acquire 25.0% or more of the common stock of Benjamin Franklin Bancorp.

     Restrictions applicable to the operations of bank holding companies may also deter companies from seeking to obtain control of Benjamin Franklin Bancorp. See “Regulation and Supervision” on page [#].

     Massachusetts Banking Law. Massachusetts banking law also prohibits any “company,” defined to include banking institutions as well as corporations, from directly or indirectly controlling the voting power of 25.0% or more of the voting stock of two or more banking institutions without the prior approval of the Massachusetts Board of Bank Incorporation. Additionally, an out-of-state company that already directly or indirectly controls voting power of 25.0% or more of the voting stock of two or more banking institutions may not also acquire direct or indirect ownership or control of more than 5.0% of the voting stock of a Massachusetts banking institution without the prior approval of the Board of Bank Incorporation. Finally, for a period of three years following completion of a conversion to stock form, no person may directly or indirectly offer to acquire or acquire beneficial ownership of more than 10.0% of any class of equity security of a converting mutual holding company without prior written approval of the Massachusetts Commissioner of Banks.

     Massachusetts Anti-Takeover Laws. The Massachusetts General Laws contain two anti-takeover statutes that are applicable to certain public corporations in Massachusetts—Chapter 110F, the “business combinations” law and Chapter 110D, the “control share acquisition” law. Chapter 110F of the Massachusetts General Laws generally prohibits a publicly held Massachusetts corporation from engaging in a business combination with an interested stockholder for a period of three years after the date of the transaction which results in the stockholder becoming an interested stockholder, unless:

  •   the corporation’s board of directors approves the business combination or transaction which results in the stockholder becoming an interested stockholder prior to such event; or
 
  •   the interested stockholder owns at least 90% of the corporation’s outstanding voting stock upon completion of the transaction that resulted in its becoming an interested stockholder, excluding shares held by directors who are also officers of the corporation and by certain employee stock plans, or
 
  •   the business combination is approved by both the corporation’s board of directors and the holders of two-thirds of the corporation’s outstanding voting stock at a meeting of stockholders, excluding shares held by the interested stockholder.

     The Massachusetts General Laws defines the term “business combination” to include a merger, a stock or asset sale, and certain other transactions resulting in a financial benefit to the interested stockholder. An “interested stockholder” is generally a person who, together with affiliates and associates, owns, or within the prior three years, owned, 5% or more of a corporation’s voting stock.

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     Benjamin Franklin Bancorp’s articles contain a provision opting out of the applicability of Chapter 110D, in light of the provisions contained in Benjamin Franklin Bancorp’s articles that provide similar anti-takeover protections.

TRANSFER AGENT AND REGISTRAR FOR
BENJAMIN FRANKLIN BANCORP COMMON STOCK

     American Stock Transfer & Trust Company will act as the transfer agent and registrar for issued and outstanding shares of Benjamin Franklin Bancorp common stock.

LEGAL OPINIONS

     Foley Hoag llp, Boston, Massachusetts, will give its opinions on behalf of Benjamin Franklin Bancorp concerning the legality of the shares issued in the offering and concerning certain tax matters. Foley Hoag llp has consented to the references herein to its opinions. Certain legal matters will be passed upon for Ryan Beck & Co., Inc. by Luse Gorman Pomerenk & Schick, P.C. of Washington, D.C.

EXPERTS

     The consolidated financial statements of Benjamin Franklin Bancorp as of December 31, 2003 and 2002 and for the years then ended included in this prospectus have been so included in reliance on the report of Wolf & Company, P.C., independent accountants, given on the authority of said firm as experts in auditing and accounting.

     The consolidated financial statements of Chart Bank as of December 31, 2003 and 2002 and for the years then ended included in this prospectus have been so included in reliance on the report of Wolf & Company, P.C., independent accountants, given on the authority of said firm as experts in auditing and accounting.

     Arthur Andersen LLP, which audited the financial statements of Benjamin Franklin Bancorp for the year ended December 31, 2001 in this prospectus, was convicted on June 15, 2002 of federal obstruction of justice charges arising from the government’s investigation of Enron Corp. At the time of Arthur Andersen LLP’s conviction, it ceased accounting and auditing operations, and the Board of Trustees of Benjamin Franklin Bancorp declined to retain Arthur Andersen LLP to provide further services. At that time, there were no disagreements on the part of Arthur Andersen LLP with Benjamin Franklin Bancorp, and the reports of Arthur Andersen LLP concerning the above financial statements of Benjamin Franklin Bancorp contained no adverse opinion or disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope, or accounting principles. Because Arthur Andersen LLP has ceased accounting and auditing operations in 2002, Benjamin Franklin Bancorp has not obtained, as contemplated by the Securities and Exchange Commission’s regulations, a letter from Arthur Andersen LLP confirming the above statements.

     Arthur Andersen LLP has not consented to the incorporation of their report on the financial statements of Benjamin Franklin Bancorp for the year ended December 31, 2001 in this prospectus, and we have dispensed with the requirement to file their consent in reliance upon Rule 437a of the Securities Act of 1933. Because Arthur Andersen LLP has not consented to the incorporation by reference of their reports in this prospectus, you will not be able to recover against Arthur Andersen LLP under Section 11 of the Securities Act of 1933 for any untrue statements of a material fact contained in the financial statements audited by Arthur Andersen LLP or any omissions to state a material fact required to be stated therein. See “Risk Factors—Risks Related To Prior Auditor Of Benjamin Franklin Bancorp” on page [#].

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     RP Financial, LC. has consented to the publication in this prospectus of the summary of its report to Benjamin Franklin Bancorp setting forth its opinion as to the estimated pro forma market value of the shares of common stock upon completion of the conversion and the offering.

ADDITIONAL INFORMATION

     We have filed a registration statement with the SEC under the Securities Act of 1933 with respect to the common stock offered through this prospectus. As permitted by the rules and regulations of the SEC, this prospectus does not contain all the information set forth in the registration statement. You may examine this information without charge at the public reference facilities of the SEC located at 450 Fifth Street, NW, Washington, D.C. 20549. You may obtain copies of the material from the SEC at prescribed rates. The registration statement also is available through the SEC’s world wide web site on the internet at http://www.sec.gov.

     This document contains a description of the material features of certain contracts and other documents filed as exhibits to the registration statement. The statements as to the contents of such exhibits are of necessity brief descriptions and are not necessarily complete. Each such statement is qualified by reference to the contract or document.

     Benjamin Franklin Bancorp has filed an application for conversion with the Massachusetts Commissioner of Banks and has also requested the Federal Reserve Board’s approval of the conversion. This prospectus omits some information contained in those applications. The Massachusetts conversion application may be examined at the Massachusetts Division of Banks, One South Station, Boston, Massachusetts 02110 and the public portion of the materials filed with the Federal Reserve Board may be examined at the offices of the Federal Reserve Bank of Boston, 600 Atlantic Avenue, Boston, Massachusetts 02106.

     In connection with the offering, we will register the common stock with the Securities and Exchange Commission under Section 12(g) of the Exchange Act. Upon this registration, Benjamin Franklin Bancorp will become subject to the Securities and Exchange Commission’s proxy solicitation rules and periodic reporting requirements.

     You may obtain a copy of the plan of conversion as well as the Articles of Organization and bylaws of Benjamin Franklin Bancorp without charge from us by contacting Claire S. Bean at Benjamin Franklin Bank, 58 Main Street, Franklin, Massachusetts, 02038. Copies of the appraisal report of RP Financial, LC. and the detailed memorandum of the appraiser setting forth the method and assumptions for such appraisal are available for inspection at the main office of Benjamin Franklin Bank by contacting Claire S. Bean as indicated above.

STOCK INFORMATION CENTER

     If you have any questions regarding the offering or the conversion, please call our Stock Information Center, toll free, at [   ].

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BENJAMIN FRANKLIN BANCORP, M.H.C.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

         
    Page
Report of Independent Registered Public Accounting Firm
     F-2  
Report of Independent Public Accountants
     F-3  
Consolidated Balance Sheets as of September 30, 2004 (Unaudited) and December 31, 2003 and 2002
     F-4  
Consolidated Statements of Income for the Nine Months Ended September 30, 2004 and 2003 (unaudited) and for the Years Ended December 31, 2003, 2002 and 2001
     F-5  
Consolidated Statements of Changes in Retained Earnings for the Nine Months Ended September 30, 2004 (unaudited) and for the Years Ended December 31, 2003, 2002 and 2001
     F-6  
Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2004 and 2003 (unaudited) and for the Years Ended December 31, 2003, 2002 and 2001
     F-7  
Notes to Consolidated Financial Statements
     F-9  

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Audit Committee
Benjamin Franklin Bancorp, M.H.C.
Franklin, Massachusetts

We have audited the accompanying consolidated balance sheets of Benjamin Franklin Bancorp, M.H.C. and subsidiaries as of December 31, 2003 and 2002, and the related consolidated statements of income, changes in retained earnings and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. The consolidated financial statements of Benjamin Franklin Bancorp, M.H.C. and subsidiaries for the year ended December 31, 2001 (before they were restated for the matter discussed in Note 1 to the consolidated financial statements) were audited by other auditors who have ceased operations and whose report, dated April 12, 2002, and included herein, expressed an unqualified opinion on those statements.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the 2003 and 2002 consolidated financial statements referred to above present fairly, in all material respects, the financial position of Benjamin Franklin Bancorp, M.H.C. and subsidiaries as of December 31, 2003 and 2002, and the results of their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

WOLF & COMPANY, P.C.

Boston, Massachusetts
February 27, 2004, except for Note 17 as to which
     the date is October 28, 2004

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Report of Independent Public Accountants

To the Audit Committee of
Benjamin Franklin Bancorp, M.H.C. and subsidiaries

We have audited the accompanying consolidated balance sheets of Benjamin Franklin Bancorp, M.H.C. and subsidiaries (the Company) as of December 31, 2001 and 2000 and the related consolidated statements of operations, changes in surplus and comprehensive income (loss) and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly in all material respects, the consolidated financial position of the Company as of December 31, 2001 and 2000 and the consolidated results of their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in the United States.

ARTHUR ANDERSEN LLP

Boston, Massachusetts
April 1, 2002

This Report of Independent Public Accountants is a copy of a previously issued Arthur Andersen LLP (Andersen) report and has not been reissued by Andersen in connection with this filing on Form S-1. The inclusion of this previously issued Andersen report is made pursuant to Section 2.02(e) of regulation S-X. Note that this previously issued Andersen report includes references to the year ended December 31, 2000 which is not required to be presented in the accompanying consolidated financial statements as of and for the years ended December 31, 2003.

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BENJAMIN FRANKLIN BANCORP, M.H.C. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Dollars in Thousands)

                         
    September 30,   December 31,
    2004
   2003
   2002
    (Unaudited)                
ASSETS
                        
Cash and due from banks
   $ 8,295     $ 14,512     $ 14,162  
Short-term investments
     6,831       20,973       37,874  
 
    
 		      
 		      
 		  
Total cash and cash equivalents
     15,126       35,485       52,036  
 
    
 		      
 		      
 		  
Securities available for sale, at fair value
     94,423       102,646       108,520  
Securities held to maturity, at amortized cost
     266       386       986  
Restricted equity securities, at cost
     6,862       7,222       5,222  
Loans
     378,533       291,385       264,245  
Allowance for loan losses
     (3,017 )     (2,523 )     (2,312 )
 
    
 		      
 		      
 		  
Loans, net
     375,516       288,862       261,933  
Premises and equipment, net
     11,280       11,199       11,847  
Accrued interest receivable
     1,495       1,388       1,299  
Goodwill
     4,248       4,248       4,248  
Other assets
     8,715       7,408       6,139  
 
    
 		      
 		      
 		  
 
   $ 517,931     $ 458,844     $ 452,230  
 
    
 		      
 		      
 		  
LIABILITIES AND RETAINED EARNINGS
                        
Deposits
   $ 399,562     $ 380,257     $ 373,300  
Short-term borrowings
     29,000       —       —  
Long-term debt
     55,000       45,000       45,000  
Other liabilities
     3,783       4,286       4,116  
 
    
 		      
 		      
 		  
Total liabilities
     487,345       429,543       422,416  
 
    
 		      
 		      
 		  
Commitments and contingencies (Note 12)
                        
Retained earnings
     32,620       31,308       29,620  
Accumulated other comprehensive (loss) income
     (2,034 )     (2,007 )     194  
 
    
 		      
 		      
 		  
Total retained earnings
     30,586       29,301       29,814  
 
    
 		      
 		      
 		  
 
   $ 517,931     $ 458,844     $ 452,230  
 
    
 		      
 		      
 		  

See accompanying notes to consolidated financial statements.

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BENJAMIN FRANKLIN BANCORP, M.H.C. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Dollars in Thousands)

                                         
    Nine Months Ended    
    September 30,
   Years Ended December 31,
    2004
   2003
   2003
   2002
   2001
    (Unaudited)                        
Interest and dividend income:
                                        
Loans, including fees
   $ 12,567     $ 11,601     $ 15,530     $ 16,322     $ 20,355  
Debt securities:
                                        
Taxable
     2,379       2,233       3,186       3,903       3,774  
Tax-exempt
     —       14       14       35       128  
Dividends
     170       166       250       228       365  
Short-term investments
     107       515       552       918       1,819  
 
    
 		      
 		      
 		      
 		      
 		  
Total interest and dividend income
     15,223       14,529       19,532       21,406       26,441  
 
    
 		      
 		      
 		      
 		      
 		  
Interest expense:
                                        
Interest on deposits
     3,221       3,439       4,487       5,856       10,752  
Interest on short-term borrowings
     56       —       —       —       —  
Interest on long-term debt
     1,747       1,695       2,265       1,738       1,645  
 
    
 		      
 		      
 		      
 		      
 		  
Total interest expense
     5,024       5,134       6,752       7,594       12,397  
 
    
 		      
 		      
 		      
 		      
 		  
Net interest income
     10,199       9,395       12,780       13,812       14,044  
Provision for loan losses
     470       300       625       1,412       51  
 
    
 		      
 		      
 		      
 		      
 		  
Net interest income, after provision for loan losses
     9,729       9,095       12,155       12,400       13,993  
 
    
 		      
 		      
 		      
 		      
 		  
Other income (charges):
                                        
Deposit service fees
     684       632       928       859       856  
Loan servicing fees
     187       309       336       525       86  
Gain on sale of loans, net
     106       951       975       71       167  
Gain (loss) on sales of securities, net
     8       113       86       1,569       (2,529 )
Pension plan curtailment loss
     —       —       —       (741 )     —  
Miscellaneous
     681       558       751       571       643  
 
    
 		      
 		      
 		      
 		      
 		  
Total other income (charges)
     1,666       2,563       3,076       2,854       (777 )
 
    
 		      
 		      
 		      
 		      
 		  
Operating expenses:
                                        
Salaries and employee benefits
     5,679       5,006       6,668       6,150       5,621  
Occupancy and equipment
     1,035       1,320       1,788       1,814       1,922  
Data processing
     1,047       1,115       1,446       1,368       1,225  
Professional fees
     192       821       985       723       651  
Other general and administrative
     1,504       1,364       1,837       2,060       2,146  
 
    
 		      
 		      
 		      
 		      
 		  
Total operating expenses
     9,457       9,626       12,724       12,115       11,565  
 
    
 		      
 		      
 		      
 		      
 		  
Income before income taxes
     1,938       2,032       2,507       3,139       1,651  
Provision for income taxes
     626       651       819       443       1,610  
 
    
 		      
 		      
 		      
 		      
 		  
Net income
   $ 1,312     $ 1,381     $ 1,688     $ 2,696     $ 41  
 
    
 		      
 		      
 		      
 		      
 		  

See accompanying notes to consolidated financial statements.

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BENJAMIN FRANKLIN BANCORP, M.H.C. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN RETAINED EARNINGS

Nine Months Ended September 30, 2004 (Unaudited) and the
Years Ended December 31, 2003, 2002 and 2001

(Dollars in Thousands)

                         
            Accumulated    
            Other   Total
    Retained   Comprehensive   Retained
    Earnings
   Income (Loss)
   Earnings
Balance at December 31, 2000, as restated (See Note 1)
   $ 26,883     $ (1,589 )   $ 25,294  
 
                    
 		  
Comprehensive income:
                        
Net income
     41       —       41  
Change in net unrealized gain/loss on securities available for sale, net of reclassification adjustment and tax effects
     —       2,102       2,102  
 
    
 		      
 		      
 		  
Total comprehensive income
                     2,143  
 
                    
 		  
Balance at December 31, 2001
     26,924       513       27,437  
 
                    
 		  
Comprehensive income:
                        
Net income
     2,696       —       2,696  
Change in net unrealized gain/loss on securities available for sale, net of reclassification adjustment and tax effects
     —       (319 )     (319 )
 
    
 		      
 		      
 		  
Total comprehensive income
                     2,377  
 
                    
 		  
Balance at December 31, 2002
     29,620       194       29,814  
 
                    
 		  
Comprehensive loss:
                        
Net income
     1,688       —       1,688  
Change in net unrealized gain/loss on securities available for sale, net of reclassification adjustment and tax effects
     —       (2,201 )     (2,201 )
 
    
 		      
 		      
 		  
Total comprehensive loss
                     (513 )
 
                    
 		  
Balance at December 31, 2003
     31,308       (2,007 )     29,301  
 
                    
 		  
Comprehensive income:
                        
Net income (unaudited)
     1,312       —       1,312  
Change in net unrealized gain/loss on securities available for sale, net of reclassification adjustment and tax effects (unaudited)
     —       (27 )     (27 )
 
    
 		      
 		      
 		  
Total comprehensive income (unaudited)
                     1,285  
 
                    
 		  
Balance at September 30, 2004 (unaudited)
   $ 32,620     $ (2,034 )   $ 30,586  
 
    
 		      
 		      
 		  

See accompanying notes to consolidated financial statements.

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BENJAMIN FRANKLIN BANCORP, M.H.C. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in Thousands)

                                         
    Nine Months Ended    
    September 30,
   Years Ended December 31,
    2004
   2003
   2003
   2002
   2001
    (Unaudited)                        
Cash flows from operating activities:
                                        
Net income
   $ 1,312     $ 1,381     $ 1,688     $ 2,696     $ 41  
Adjustments to reconcile net income to net cash provided by operating activities:
                                        
Net amortization of securities
     703       554       833       316       104  
Amortization of deferred loan costs, net
     214       363       407       582       551  
Loss (gain) on sales of securities, net
     (8 )     (113 )     (86 )     (1,569 )     2,529  
Provision for loan losses
     470       300       625       1,412       51  
Amortization of mortgage servicing rights
     423       732       892       535       358  
Depreciation expense
     509       688       872       1,008       688  
Deferred income tax (benefit) provision
     48       (259 )     (169 )     (1,005 )     1,981  
Loans originated for sale
     (28,566 )     (92,606 )     (96,256 )     (69,752 )     (63,411 )
Proceeds from sales of loans
     28,566       92,606       96,256       69,752       63,411  
(Increase) decrease in accrued interest receivable
     (107 )     (241 )     (89 )     919       536  
Other, net
     (2,213 )     (261 )     (1,576 )     (1,846 )     (2,414 )
 
    
 		      
 		      
 		      
 		      
 		  
Net cash provided by operating activities
     1,351       3,144       3,397       3,048       4,425  
 
    
 		      
 		      
 		      
 		      
 		  
Cash flows from investing activities:
                                        
Activity in available-for-sale securities:
                                        
Sales
     2,015       17,123       30,886       110,420       64,995  
Maturities, calls, and principal repayments
     35,829       202,015       211,994       62,883       4,028  
Purchases
     (30,411 )     (236,088 )     (240,200 )     (202,921 )     (41,579 )
Activity in held-to-maturity securities:
                                        
Maturities and principal repayments
     120       373       600       1,763       969  
Purchases
     —       —       —       —       (1,000 )
Net change in restricted equity securities
     360       (2,000 )     (2,000 )     —       —  
Loan (originations) principal payments, net
     (87,338 )     (19,143 )     (27,961 )     (6,025 )     26,613  
Additions to premises and equipment
     (590 )     (178 )     (224 )     (501 )     (477 )
 
    
 		      
 		      
 		      
 		      
 		  
Net cash (used) provided by investing activities
     (80,015 )     (37,898 )     (26,905 )     (34,381 )     53,549  
 
    
 		      
 		      
 		      
 		      
 		  

(continued)

     See accompanying notes to consolidated financial statements.

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BENJAMIN FRANKLIN BANCORP, M.H.C. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Concluded)

(Dollars in Thousands)

                                         
    Nine Months Ended    
    September 30,
   Years Ended December 31,
    2004
   2003
   2003
   2002
   2001
    (Unaudited)                        
Cash flows from financing activities:
                                        
Net increase (decrease) in deposits
     19,305       17,549       6,957       12,178       (27,353 )
Proceeds from short-term borrowings
     29,000       —       —       —       —  
Net proceeds from long-term debt
     10,000       —       —       9,000       10,600  
 
    
 		      
 		      
 		      
 		      
 		  
Net cash provided (used) by financing activities
     58,305       17,549       6,957       21,178       (16,753 )
 
    
 		      
 		      
 		      
 		      
 		  
Net change in cash and cash equivalents
     (20,359 )     (17,205 )     (16,551 )     (10,155 )     41,221  
Cash and cash equivalents at beginning of year
     35,485       52,036       52,036       62,191       20,970  
 
    
 		      
 		      
 		      
 		      
 		  
Cash and cash equivalents at end of year
   $ 15,126     $ 34,831     $ 35,485     $ 52,036     $ 62,191  
 
    
 		      
 		      
 		      
 		      
 		  
Supplemental cash flow information:
                                        
Interest paid on deposits
   $ 3,222     $ 3,444     $ 4,492     $ 5,871     $ 11,014  
Interest paid on short-term borrowings
     39       —       —       —       —  
Interest paid on long-term debt
     1,726       1,723       2,280       1,632       1,645  
Income taxes paid (refunded)
     640       940       942       (356 )     1,363  

See accompanying notes to consolidated financial statements.

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BENJAMIN FRANKLIN BANCORP, M.H.C. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Nine Months Ended September 30, 2004 and 2003 (Unaudited) and Years Ended
December 31, 2003, 2002 and 2001

(Dollars in Thousands)

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
    Basis of presentation and consolidation
 
    The consolidated financial statements include the accounts of Benjamin Franklin Bancorp, M.H.C. (the “Company”) and its wholly-owned subsidiary, Benjamin Franklin Bank (the “Bank”). The Company’s wholly-owned subsidiary, Benjamin Franklin Capital Trust, was included in the Company’s consolidated financial statements for December 31, 2003 and 2002 and recorded on the equity method effective January 1, 2004 (See Note 1 - Recent Accounting Pronouncements). The Bank has one subsidiary, Benjamin Franklin Securities Corp., formed for the purpose of buying, holding, and selling securities. All significant intercompany balances and transactions have been eliminated in consolidation.
 
    The financial information included herein as of September 30, 2004 and for the interim periods ended September 30, 2004 and 2003 is unaudited; however, in the opinion of management the information reflects all adjustments (consisting solely of normal recurring adjustments) that are necessary for a fair presentation. The results shown for nine months ended September 30, 2004 and 2003 are not necessary indicative of the results to be obtained for a full year.
 
    Business and operating segments
 
    The Company provides a variety of financial services to individuals and small businesses through its six offices in Norfolk and Worcester counties. Its primary deposit products are checking, savings and term certificate accounts, and its primary lending products are residential and commercial mortgage loans. The Bank also provides non-deposit investment products to customers.
 
    Management evaluates the Company’s performance and allocates resources based on a single segment concept. Accordingly, there are no separately identified operating segments for which discrete financial information is available. The Company does not derive revenues from, or have assets located in, foreign countries, nor does it derive revenues from any single customer that represents 10% or more of the Company’s total revenues.

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BENJAMIN FRANKLIN BANCORP, M.H.C. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in Thousands)

    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
 
    Use of estimates
 
    In preparing consolidated financial statements in conformity with accounting principles generally accepted in the United States of America, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the consolidated balance sheet and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses, other-than-temporary impairment losses on securities and the valuation of deferred tax assets.
 
    Reclassifications
 
    Certain amounts in the 2002 and 2001 consolidated financial statements have been reclassified to conform to the 2003 presentation.
 
    Prior period adjustment
 
    As a result of an overstatement of deferred tax liabilities in connection with temporary income tax differences, identified during 2002, a prior period adjustment was made to retained earnings as of December 31, 2000, as follows:

         
    Retained
    Earnings
Balance, as previously reported
   $ 26,383  
Effect of prior period adjustment on opening balance
     500  
 
    
 		  
Balance, as restated
   $ 26,883  
 
    
 		  

    Cash and cash equivalents
 
    Cash and cash equivalents include cash and balances due from banks and short-term investments, all of which mature within ninety days.

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BENJAMIN FRANKLIN BANCORP, M.H.C. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in Thousands)

    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
 
    Securities
 
    Debt securities that management has the positive intent and ability to hold to maturity are classified as “held to maturity” and recorded at amortized cost. Securities not classified as held to maturity, including equity securities with readily determinable fair values, are classified as “available for sale” and recorded at fair value, with unrealized gains and losses excluded from earnings and reported in other comprehensive income/loss.
 
    Purchase premiums and discounts are recognized into interest income using the interest method over the contractual terms of the securities. Declines in the fair value of held-to-maturity and available-for-sale securities below their cost that are deemed to be other-than-temporary are reflected in earnings as realized losses. In estimating other-than-temporary impairment losses, management considers (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition of the issuer, and (3) the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value. Gains and losses on the sale of securities are recorded on the trade date and determined using the specific identification method.
 
    Restricted equity securities, which consist of Federal Home Loan Bank stock and stock in a community investment fund, are carried at cost.
 
    Loans
 
    The Bank grants mortgage, commercial and consumer loans to customers. A substantial portion of the loan portfolio is represented by mortgage loans in Franklin, Massachusetts and surrounding communities. The ability of the Bank’s debtors to honor their contracts is dependent upon the local real estate market and general economic conditions in this area.
 
    Loans that management has the intent and ability to hold for the foreseeable future or until maturity or pay-off generally are reported at their outstanding unpaid principal balances adjusted for charge-offs, the allowance for loan losses, and any deferred fees or costs on originated loans. Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, are deferred and recognized as an adjustment of the related loan yield using the interest method.
 
    The accrual of interest on mortgage and commercial loans is discontinued at the time the loan is 90 days past due unless the credit is well-secured and in process of collection. Past due status is based on contractual terms of the loan. In all cases, loans are placed on non-accrual or charged-off at an earlier date if collection of principal or interest is considered doubtful.

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BENJAMIN FRANKLIN BANCORP, M.H.C. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in Thousands)

    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
 
    Loans (concluded)
 
    All interest accrued but not collected for loans that are placed on non-accrual or charged off is reversed against interest income. The interest on these loans is accounted for on the cash-basis or cost-recovery method, until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.
 
    Allowance for loan losses
 
    The allowance for loan losses is established as losses are estimated to have occurred through a provision for loan losses charged to earnings. Loan losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance.
 
    The allowance for loan losses is evaluated on a regular basis by management and is based upon management’s periodic review of the collectibility of the loans in light of historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available.
 
    The allowance consists of specific, general and unallocated components. The specific component relates to loans that are classified as either doubtful, substandard or special mention. For such loans that are also classified as impaired, an allowance is established when the discounted cash flows or collateral value or observable market price of the impaired loan is lower than the carrying value of the loan. The general component covers non-classified loans and is based on historical loss experience adjusted for qualitative factors. An unallocated component is maintained to cover uncertainties that could affect management’s estimate of probable losses. The unallocated component of the allowance reflects the margin of imprecision inherent in the underlying assumptions used in the methodologies for estimating specific and general losses in the portfolio.
 
    A loan is considered impaired when, based on current information and events, it is probable that the Bank will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Impairment is measured on a loan by loan basis for commercial loans by either the present value of expected future cash flows discounted at the loan’s effective interest rate, or the fair value of the collateral if the loan is collateral dependent.

F-12

Table of Contents

BENJAMIN FRANKLIN BANCORP, M.H.C. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in Thousands)

    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
 
    Allowance for loan losses (concluded)
 
    Large groups of smaller balance homogeneous loans are collectively evaluated for impairment. Accordingly, the Bank does not separately identify individual consumer and residential loans for impairment disclosures.
 
    Servicing
 
    Servicing assets are recognized as separate assets when rights are acquired through purchase or through sale of financial assets. For sales of mortgage loans, a portion of the cost of originating the loan is allocated to the servicing right based on relative fair value. Fair value is based on market prices for comparable mortgage servicing contracts. Capitalized servicing rights are reported in other assets and are amortized into noninterest income in proportion to, and over the period of, the estimated future net servicing income of the underlying financial assets. Servicing assets are evaluated for impairment based upon the fair value of the rights as compared to amortized cost. Impairment is determined by stratifying rights by predominant characteristics, such as interest rates and terms. Fair value is determined using prices for similar assets with similar characteristics, when available, or based upon discounted cash flows using market-based assumptions. Impairment is recognized through a valuation allowance for an individual stratum, to the extent that fair value is less than the capitalized amount for the stratum.
 
    Premises and equipment
 
    Land is carried at cost. Buildings and improvements and equipment are carried at cost, less accumulated depreciation computed on the straight-line method over the estimated useful lives of the assets.
 
    Transfers of financial assets
 
    Transfers of financial assets are accounted for as sales, when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity.

F-13

Table of Contents

BENJAMIN FRANKLIN BANCORP, M.H.C. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in Thousands)

    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
 
    Goodwill
 
    Prior to January 1, 2002, goodwill, arising from the acquisition of Foxboro National Bank, was being amortized on a straight-line basis over 15 years. Effective January 1, 2002, the Company adopted Statement of Financial Accounting Standards (“SFAS”) No. 142, “Goodwill and Other Intangible Assets” and goodwill, which amounted to $4,248 at September 30, 2004 (unaudited), December 31, 2003 and 2002, is no longer amortized, but is evaluated for impairment. In evaluating the goodwill, the Company does not track the separate fair value of Foxboro National Bank, but instead measures the fair value of the entire Company. If the Company determines that goodwill is impaired, the carrying value of goodwill would be reduced through a charge to earnings.
 
    If goodwill amortization of $385 had not been recorded for the year ending December 31, 2001, net income as reported for 2001 would have increased by $375.
 
    Derivative financial instruments
 
    On January 1, 2001, the Company adopted SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities.” This Statement requires that all derivatives be recognized as assets or liabilities in the balance sheet and measured at fair value.
 
    Retirement plan
 
    The Company accounted for pension plan benefits on the net periodic pension cost method for financial reporting purposes. This method recognized the compensation cost of an employee’s pension benefit over the employee’s approximate service period. The aggregate cost method was utilized for funding purposes. The Bank elected to curtail the pension plan effective December 31, 2000 (See Note 14).
 
    Income taxes
 
    Deferred tax assets and liabilities are reflected at currently enacted income tax rates applicable to the period in which the deferred tax assets or liabilities are expected to be realized or settled. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted accordingly through the provision for income taxes. The Bank’s base amount of its federal income tax reserve for loan losses is a permanent difference for which there is no recognition of a deferred tax liability. However, the loan loss allowance maintained for financial reporting purposes is a temporary difference with allowable recognition of a related deferred tax asset, if deemed realizable.

F-14

Table of Contents

BENJAMIN FRANKLIN BANCORP, M.H.C. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in Thousands)

    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
 
    Income taxes (concluded)
 
    A valuation allowance related to deferred tax assets is established when, in the judgement of management, it is more likely than not, that all or a portion of such deferred tax assets will be realized. (See Note 11)
 
    Advertising costs
 
    Advertising costs are expensed as incurred.
 
    Comprehensive income/loss
 
    Accounting principles generally require that recognized revenue, expenses, gains and losses be included in net income. Although certain changes in assets and liabilities, such as unrealized gains and losses on available-for-sale securities, are reported as a separate component of the retained earnings section of the consolidated balance sheet, such items, along with net income, are components of comprehensive income/loss. The components of other comprehensive income/loss and related tax effects are as follows:

                                         
    Nine Months Ended    
    September 30,
   Years Ended December 31,
    2004
   2003
   2003
   2002
   2001
    (Unaudited)                        
Change in unrealized holding gains (losses) on securities available for sale
   $ (87 )   $ (1,896 )   $ (2,361 )   $ 1,081     $ (133 )
Reclassification adjustment for (gains) losses realized in income
     (8 )     (113 )     (86 )     (1,569 )     2,529  
 
    
 		      
 		      
 		      
 		      
 		  
Net unrealized gains/losses
     (95 )     (2,009 )     (2,447 )     (488 )     2,396  
Tax effect
     68       84       246       169       (294 )
 
    
 		      
 		      
 		      
 		      
 		  
Net-of-tax amount
   $ (27 )   $ (1,925 )   $ (2,201 )   $ (319 )   $ 2,102  
 
    
 		      
 		      
 		      
 		      
 		  

F-15

Table of Contents

BENJAMIN FRANKLIN BANCORP, M.H.C. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in Thousands)

    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
 
    Recent accounting pronouncements
 
    In April 2003, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities.” This Statement amends SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities” and clarifies accounting for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities under SFAS No. 133. This Statement is effective for contracts entered into or modified after June 30, 2003, except in certain circumstances, and for hedging relationships designated after June 30, 2003. This Statement did not have a material effect on the Company’s consolidated financial statements.
 
    In December 2003, the FASB issued a revision to Interpretation No. 46, “Consolidation of Variable Interest Entities,” (“FIN 46”) which establishes guidance for determining when an entity should consolidate another entity that meets the definition of a variable interest entity. FIN 46 requires a variable interest entity to be consolidated by a company if that company will absorb a majority of the expected losses, will receive a majority of the expected residual returns, or both. FASB deferred the effective date of FIN 46 to no later than the end of the first reporting period that ends after March 15, 2004. The Company adopted FIN 46 as of January 1, 2004 which resulted in the Company no longer consolidating its wholly-owned subsidiary, Benjamin Franklin Capital Trust, and recording it on the equity method. The Interpretation and the revision had no material effect on the Company’s consolidated financial statements.
 
    In March 2004, the Securities and Exchange Commission (“SEC”) issued Staff Accounting Bulletin (“SAB”) No. 105, Application of Accounting Principles to Loan Commitments, which provides guidance regarding loan commitments that are accounted for as derivative instruments. In this SAB, the SEC determined that an interest rate lock commitment should generally be valued at zero at inception. The rate locks will continue to be adjusted for changes in value resulting from changes in market interest rates. This SAB did not have any effect on the Company’s financial position or results of operations.

F-16

Table of Contents

BENJAMIN FRANKLIN BANCORP, M.H.C. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in Thousands)

    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
 
    Recent accounting pronouncements (continued)
 
    On June 30, 2004, the FASB published an Exposure Draft, “Share-Based Payment,” an Amendment of FASB Statement Nos. 123 and 95 (the “Exposure Draft”). The FASB is proposing, among other things, amendments to SFAS No. 123 and thus, the manner in which share-based compensation, such as stock options, will be accounted for by both public and non-public companies. For public companies, the cost of employee services received in exchange for equity instruments including options and restricted stock awards generally would be measured at fair value at the grant date. The grant date fair value would be estimated using option-pricing models adjusted for the unique characteristics of those options and instruments, unless observable market prices for the same or similar options are available. The cost would be recognized over the requisite service period, often the vesting period, and would be remeasured subsequently at each reporting date through settlement date.
 
    The proposed changes in accounting would replace existing requirements under SFAS No. 123, “Accounting for Stock-Based Compensation,” and would eliminate the ability to account for share-based compensation transactions using APB Opinion No. 25, “Accounting for Stock Issued to Employees,” which does not require companies to expense options if the exercise price is equal to the trading price at the date of grant. Under the terms of the Exposure Draft, the accounting for similar transactions involving parties other than employees or the accounting for employee stock ownership plans that are subject to American Institute of Certified Public Accountants (“AICPA”) Statement of Position 93-6, “Employers’ Accounting for Employee Stock Ownership Plans,” would remain unchanged.

F-17

Table of Contents

BENJAMIN FRANKLIN BANCORP, M.H.C. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in Thousands)

    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (concluded)
 
    Recent accounting pronouncements (concluded)
 
    On September 30, 2004, the Financial Accounting Standards Board (“FASB”) issued FASB Staff Position (“FSP”) Emerging Issues Task Force (“EITF”) Issue No. 03-1-1 delaying the effective date of paragraphs 10-20 of EITF 03-1, “The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments”, which provides guidance for determining the meaning of “other-than-temporarily impaired” and its application to certain debt and equity securities within the scope of SFAS No. 115, “Accounting for Certain Investments in Debt and Equity Securities”, and investments accounted for under the cost method. The guidance requires that investments which have declined in value due to credit concerns or solely due to changes in interest rates must be recorded as other-than-temporarily impaired unless the Company can assert and demonstrate its intention to hold the security for a period of time sufficient to allow for a recovery of fair value up to or beyond the cost of the investment which might mean maturity. The delay of the effective date of EITF 03-1 will be superceded concurrent with the final issuance of proposed FSP Issue 03-1-a. Proposed FSP Issue 03-1-a is intended to provide implementation guidance with respect to all securities analyzed for impairment under paragraphs 10-20 of EITF 03-1. Management continues to closely monitor and evaluate how the provisions of EITF 03-1 and proposed FSP Issue 03-1-a will affect the Company.
 
2.   RESTRICTIONS ON CASH AND DUE FROM BANKS
 
    The Bank is required to maintain average balances on hand or with the Federal Reserve Bank. At September 30, 2004 (unaudited), December 31, 2003 and 2002, these reserve balances amounted to $973, $6,760 and $4,703, respectively.

F-18

Table of Contents

BENJAMIN FRANKLIN BANCORP, M.H.C. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in Thousands)

3.   SHORT-TERM INVESTMENTS
 
    Short-term investments consist of the following:

                         
    September 30,   December 31,
    2004
   2003
   2002
    (Unaudited)                
Federal funds
   $ 6,215     $ 16,031     $ 14,039  
Bank Investment Liquidity Fund
     577       4,937       23,825  
Money market account
     39       5       10  
 
    
 		      
 		      
 		  
 
   $ 6,831     $ 20,973     $ 37,874  
 
    
 		      
 		      
 		  

4.   SECURITIES
 
    The amortized cost and fair value of securities with gross unrealized gains and losses follows:

                                 
            Gross   Gross    
    Amortized   Unrealized   Unrealized   Fair
    Cost
   Gains
   Losses
   Value
            (Unaudited)        
September 30, 2004:
                                
Securities available for sale:
                                
U.S. Government and federal agency obligations
   $ 37,691     $ 6     $ (205 )   $ 37,492  
Mortgage-backed securities
     53,869       56       (2,051 )     51,874  
Other bonds and obligations
     5,086       1       (30 )     5,057  
 
    
 		      
 		      
 		      
 		  
 
   $ 96,646     $ 63     $ (2,286 )   $ 94,423  
 
    
 		      
 		      
 		      
 		  
Securities held to maturity:
                                
Mortgage-backed securities
   $ 266     $ 5     $ —     $ 271  
 
    
 		      
 		      
 		      
 		  

F-19

Table of Contents

BENJAMIN FRANKLIN BANCORP, M.H.C. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in Thousands)

    SECURITIES (continued)

                                 
            Gross   Gross    
    Amortized   Unrealized   Unrealized   Fair
    Cost
   Gains
   Losses
   Value
December 31, 2003:
                                
Securities available for sale:
                                
U.S. Government and federal agency obligations
   $ 30,272     $ 91     $ (16 )   $ 30,347  
Mortgage-backed securities
     74,502       118       (2,321 )     72,299  
 
    
 		      
 		      
 		      
 		  
 
   $ 104,774     $ 209     $ (2,337 )   $ 102,646  
 
    
 		      
 		      
 		      
 		  
Securities held to maturity:
                                
Mortgage-backed securities
   $ 386     $ 12     $ —     $ 398  
 
    
 		      
 		      
 		      
 		  
December 31, 2002:
                                
Securities available for sale:
                                
U.S. Government and federal agency obligations
   $ 67,513     $ 72     $ (3 )   $ 67,582  
State and municipal bonds
     570       —       —       570  
Mortgage-backed securities
     26,376       160       (90 )     26,446  
Other bonds and obligations
     3,536       180       —       3,716  
 
    
 		      
 		      
 		      
 		  
Total debt securities
     97,995       412       (93 )     98,314  
Bank Investment Fund
     10,206       —       —       10,206  
 
    
 		      
 		      
 		      
 		  
 
   $ 108,201     $ 412     $ (93 )   $ 108,520  
 
    
 		      
 		      
 		      
 		  
Securities held to maturity:
                                
Mortgage-backed securities
   $ 986     $ 37     $ —     $ 1,023  
 
    
 		      
 		      
 		      
 		  

F-20

Table of Contents

BENJAMIN FRANKLIN BANCORP, M.H.C. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in Thousands)

    SECURITIES (continued)
 
    The amortized cost and estimated fair value of debt securities, excluding mortgage-backed securities, by contractual maturity at September 30, 2004 (unaudited) and December 31, 2003 is as follows. Expected maturities will differ from contractual maturities on certain securities because of call or prepayment provisions.

                                 
    September 30, 2004
   December 31, 2003
    Amortized   Fair   Amortized   Fair
    Cost
   Value
   Cost
   Value
    (Unaudited)                
Within 1 year
   $ 16,632     $ 16,584     $ 6,134     $ 6,140  
After 1 year through 5 years
     26,145       25,965       23,418       23,482  
After 10 years
     —       —       720       725  
 
    
 		      
 		      
 		      
 		  
 
   $ 42,777     $ 42,549     $ 30,272     $ 30,347  
 
    
 		      
 		      
 		      
 		  

    Proceeds from the sale of securities available for sale for the nine months ended September 30, 2004 and 2003 (unaudited) amounted to $2,015 and $17,123, respectively. Gross gains of $9 and $150, and gross losses of $1 and $37, were realized during the nine months ended September 30, 2004 and 2003 (unaudited), respectively.
 
    Proceeds from the sale of securities available for sale during the years ended December 31, 2003, 2002 and 2001 amounted to $30,886, $110,420 and $64,995, respectively. Gross realized gains of $189, $1,823 and $1,344, and gross losses of $103, $254 and $3,873, were realized during the years ended December 31, 2003, 2002 and 2001, respectively.

F-21

Table of Contents

BENJAMIN FRANKLIN BANCORP, M.H.C. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in Thousands)

    SECURITIES (concluded)
 
    Information pertaining to securities with gross unrealized losses at September 30, 2004 (unaudited) and December 31, 2003, aggregated by investment category and length of time that individual securities have been in a continuous loss position, follows:

                                 
    Less Than Twelve Months
   Over Twelve Months
    Gross           Gross    
    Unrealized   Fair   Unrealized   Fair
    Losses
   Value
   Losses
   Value
    (Unaudited)
September 30, 2004:
                                
U.S. Government and federal agency obligations
   $ 170     $ 30,417     $ 35     $ 6,054  
Other bonds and obligations
     30       4,559       —       —  
Mortgage-backed securities
     19       3,268       2,032       47,277  
 
    
 		      
 		      
 		      
 		  
Total temporarily impaired securities
   $ 219     $ 38,244     $ 2,067     $ 53,331  
 
    
 		      
 		      
 		      
 		  
                                 
    Less Than Twelve Months
   Over Twelve Months
    Gross           Gross    
    Unrealized   Fair   Unrealized   Fair
    Losses
   Value
   Losses
   Value
December 31, 2003:
                                
U.S. Government and federal agency obligations
   $ 16     $ 6,379     $ —     $ —  
Mortgage-backed securities
     2,295       63,998       26       867  
 
    
 		      
 		      
 		      
 		  
Total temporarily impaired securities
   $ 2,311     $ 70,377     $ 26     $ 867  
 
    
 		      
 		      
 		      
 		  

    At September 30, 2004 (unaudited) and December 31, 2003, the Company’s mortgage-backed securities have unrealized losses with an aggregate depreciation of 3.6% and 3.1%, respectively, from the amortized cost basis. Significant portions of these investments are in collateralized mortgage obligations, commonly referred to as CMOs. The unrealized losses will continue to exist as market interest rates rise above the purchase yield of the individual securities. Management’s intent is to hold these securities until maturity, as a core element of the total investment portfolio. The current CMO securities are all early-tranche investments thereby providing significant cash flows early in the life of the security. The issuers of the investments are the Federal Home Loan Mortgage Corporation (“FHLMC”) and the Federal National Mortgage Corporation (“FNMA”). The residential mortgage collateral, backing these investments and the guarantees of the federal agency issuers do not indicate that these declines are other than temporary.

F-22

Table of Contents

BENJAMIN FRANKLIN BANCORP, M.H.C. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in Thousands)

5.   LOANS
 
    A summary of the balances of loans follows:

                         
    September 30,   December 31,
    2004
   2003
   2002
    (Unaudited)                
Mortgage loans on real estate:
                        
Residential
   $ 244,363     $ 172,123     $ 165,007  
Commercial
     79,173       68,652       51,357  
Construction
     25,079       23,936       21,082  
Home equity
     21,883       18,171       16,507  
 
    
 		      
 		      
 		  
 
     370,498       282,882       253,953  
 
    
 		      
 		      
 		  
Other loans:
                        
Commercial
     4,972       5,559       6,552  
Consumer
     980       1,309       2,313  
Passbook and stock-secured
     899       910       844  
 
    
 		      
 		      
 		  
 
     6,851       7,778       9,709  
 
    
 		      
 		      
 		  
Total loans
     377,349       290,660       263,662  
Allowance for loan losses
     (3,017 )     (2,523 )     (2,312 )
Net deferred loan costs
     1,184       725       583  
 
    
 		      
 		      
 		  
Loans, net
   $ 375,516     $ 288,862     $ 261,933  
 
    
 		      
 		      
 		  

    An analysis of the allowance for loan losses follows:

                                         
    Nine Months Ended    
    September 30,
   Years Ended December 31,
    2004
   2003
   2003
   2002
   2001
    (Unaudited)                        
Balance at beginning of year
   $ 2,523     $ 2,312     $ 2,312     $ 1,177     $ 1,068  
Provision for loan losses
     470       300       625       1,412       51  
Recoveries
     33       101       123       142       90  
Charge-offs
     (9 )     (63 )     (537 )     (419 )     (32 )
 
    
 		      
 		      
 		      
 		      
 		  
Balance at end of year
   $ 3,017     $ 2,650     $ 2,523     $ 2,312     $ 1,177  
 
    
 		      
 		      
 		      
 		      
 		  

F-23

Table of Contents

BENJAMIN FRANKLIN BANCORP, M.H.C. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in Thousands)

    LOANS (concluded)
 
    The following is a summary of the impaired and non-accrual loans:

                         
    September 30,   December 31,
    2004
   2003
   2002
    (Unaudited)                
Total impaired loans with no valuation allowance
   $ 357     $ 458     $ 462  
 
    
 		      
 		      
 		  
Non-accrual loans
   $ 357     $ 458     $ —  
 
    
 		      
 		      
 		  
Loans greater than 90 days delinquent and still accruing
   $ 65     $ 5     $ 2  
 
    
 		      
 		      
 		  

     No additional funds are committed to be advanced in connection with impaired loans.

                                         
    Nine Months Ended    
    September 30,
   Years Ended December 31,
    2004
   2003
   2003
   2002
   2001
    (Unaudited)                        
Average recorded investment in impaired loans
   $ 429     $ 565     $ 594     $ 568     $ 354  
 
    
 		      
 		      
 		      
 		      
 		  
Interest income recognized on a cash basis on impaired loans
   $ 22     $ 25     $ 60     $ 30     $ 33  
 
    
 		      
 		      
 		      
 		      
 		  

    At September 30, 2004 (unaudited), December 31, 2003 and 2002, loans with a principal balance of $17,794, $23,590 and $22,915, respectively, were pledged to the Federal Reserve Bank of Boston as part of the Borrower-in-Custody advance program for which there are no outstanding advances as of September 30, 2004 (unaudited), December 31, 2003 and 2002.
 
6.   SERVICING
 
    Loans serviced for others by the Bank amounted to $133,210, $131,845 and $127,316 at September 30, 2004 (unaudited), December 31, 2003 and 2002, respectively. All loans sold and serviced for others were sold without recourse provisions.

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Table of Contents

BENJAMIN FRANKLIN BANCORP, M.H.C. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in Thousands)

    SERVICING (concluded)
 
    Mortgage servicing rights included in other assets at September 30, 2004 (unaudited), December 31, 2003 and 2002 were $721, $862 and $889, respectively. The fair value of mortgage servicing rights was $1,021, $1,008 and $984 at September 30, 2004 (unaudited), December 31, 2003 and 2002, respectively. Information applicable to mortgage servicing rights is as follows:

                                         
    Nine Months    
    Ended   Years Ended
    September 30,
   December 31,
    2004
   2003
   2003
   2002
   2001
    (Unaudited)                        
Mortgage servicing rights capitalized
   $ 282     $ 780     $ 865     $ 721     $ 721  
 
    
 		      
 		      
 		      
 		      
 		  
Mortgage servicing rights amortized
   $ 423     $ 732     $ 892     $ 535     $ 358  
 
    
 		      
 		      
 		      
 		      
 		  

7.   PREMISES AND EQUIPMENT
 
    A summary of the cost and accumulated depreciation of premises and equipment follows:

                                 
    September 30,   December 31,
   Estimated
    2004
   2003
   2002
   Useful Lives
    (Unaudited)                        
Premises:
                                
Land
   $ 4,357     $ 4,357     $ 4,357          
Buildings and improvements
     10,505       10,458       10,389     5 - 39 years
Equipment
     4,657       4,114       3,959     2 - 10 years
 
    
 		      
 		      
 		          
 
     19,519       18,929       18,705          
Less accumulated depreciation
     (8,239 )     (7,730 )     (6,858 )        
 
    
 		      
 		      
 		          
 
   $ 11,280     $ 11,199     $ 11,847          
 
    
 		      
 		      
 		          

    Depreciation expense for the nine months ended September 30, 2004 and 2003 (unaudited) and years ended December 31, 2003, 2002 and 2001 amounted to $509, $673, $872, $1,008 and $688, respectively.

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BENJAMIN FRANKLIN BANCORP, M.H.C. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in Thousands)

8.   DEPOSITS
 
    A summary of deposit balances, by type, is as follows:

                         
    September 30,   December 31,
    2004
   2003
   2002
    (Unaudited)                
Demand deposits
   $ 86,605     $ 85,681     $ 36,730  
NOW
     25,179       24,581       79,904  
Regular and other savings
     99,799       96,118       87,536  
Money market deposits
     54,390       50,094       44,177  
 
    
 		      
 		      
 		  
Total non-certificate accounts
     265,973       256,474       248,347  
 
    
 		      
 		      
 		  
Term certificates less than $100,000
     94,892       93,643       96,734  
Term certificates of $100,000 or more
     38,697       30,140       28,219  
 
    
 		      
 		      
 		  
Total certificate accounts
     133,589       123,783       124,953  
 
    
 		      
 		      
 		  
Total deposits
   $ 399,562     $ 380,257     $ 373,300  
 
    
 		      
 		      
 		  

    A summary of term certificate accounts by maturity is as follows:

                                                 
    September 30, 2004
   December 31, 2003
   December 31, 2002
            Weighted           Weighted           Weighted
            Average           Average           Average
    Amount
   Rate
   Amount
   Rate
   Amount
   Rate
    (Unaudited)                                
Within 1 year
   $ 93,965       1.63 %   $ 89,585       2.25 %   $ 80,873       2.59 %
Over 1 year to 3 years
     34,618       2.91       28,633       3.47       35,462       3.99  
Over 3 years to 5 years
     5,006       3.13       5,565       2.75       8,618       3.87  
 
    
 		              
 		              
 		          
 
   $ 133,589       2.02 %   $ 123,783       2.55 %   $ 124,953       3.07 %
 
    
 		              
 		              
 		          

9.   SHORT-TERM BORROWINGS
 
    Short-term borrowings consist of Federal Home Loan Bank (“FHLB”) advances maturing within one year at a weighted average rate of 1.68% at September 30, 2004 (unaudited). The advances are secured by a blanket lien on qualified collateral as described in Note 10.

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BENJAMIN FRANKLIN BANCORP, M.H.C. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in Thousands)

10.   LONG-TERM DEBT
 
    Long-term debt consists of the following:

                         
    September 30,   December 31,
    2004
   2003
   2002
    (Unaudited)                
FHLB advances
   $ 46,000     $ 36,000     $ 36,000  
Subordinated debt
     9,000       9,000       9,000  
 
    
 		      
 		      
 		  
 
   $ 55,000     $ 45,000     $ 45,000  
 
    
 		      
 		      
 		  

FHLB Advances

     Additional information pertaining to FHLB advances at September 30, 2004 (unaudited) and December 31, 2003 and 2002 are as follows:

                                 
    September 30, 2004
   December 31, 2003 and 2002
            Weighted           Weighted
            Average           Average
Maturity Date
   Amount
   Rate
   Amount
   Rate
    (Unaudited)                
2007
   $ 10,000       3.12 %   $ —       — %
2009*
     6,000       4.91       6,000       4.91  
2011*
     30,000       4.38       30,000       4.38  
 
    
 		              
 		          
 
   $ 46,000       4.18 %   $ 36,000       4.47 %
 
    
 		              
 		          

*   All advances are callable during 2004.

    The Bank also has an available line of credit with the FHLB at an interest rate that adjusts daily. At September 30, 2004 (unaudited), December 31, 2003 and 2002, borrowings under the line were limited to $500, none of which was outstanding.
 
    Borrowings under the line are limited to 2% of the Bank’s total assets. All borrowings from the Federal Home Loan Bank are secured by a blanket lien on qualified collateral, defined principally as 75% of the carrying value of first mortgage loans on owner-occupied residential property and 90% of the market value of U.S. Government and federal agency securities.

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BENJAMIN FRANKLIN BANCORP, M.H.C. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in Thousands)

    LONG-TERM DEBT (concluded)
 
    Subordinated Debt
 
    During the fourth quarter of 2002, the Company raised net proceeds of $8.7 million in a sale of $9.0 million of subordinated debentures to Benjamin Franklin Capital Trust I (the “Trust”), a wholly-owned subsidiary of the Company. The Trust funded the purchase by participating in a pooled offering of 9,000 capital securities representing preferred ownership interests in the assets of the Trust with a liquidation value of $1,000 each. Using interest payments made by the Company on the debentures, the Trust will pay quarterly dividends to preferred security holders. The percentage rate of interest payable on the subordinated debentures and the cumulative dividends payable quarterly on the preferred securities is 6.94% for the first five years and thereafter will be at a rate equal to the three month Libor rate plus 3.45%. The Company has the option to defer interest payments on the subordinated debentures for up to five years and, accordingly, the Trust may defer dividend distributions for up to five years. The debentures and the preferred securities mature in November 2032 unless the Company elects and obtains regulatory approval to accelerate the maturity date to November 2007 or thereafter.
 
    The outstanding preferred securities are classified as subordinated debt and may be included in regulatory Tier 1 capital (See Note 13), subject to a limitation that such amounts not exceed 25% of Tier 1 capital. At September 30, 2004 (unaudited), December 31, 2003 and 2002, subordinated debt aggregating $9,000, $8,945 and $8,321, respectively, is included in Tier 1 capital. Deferred debt financing costs are included in other assets and are amortized over the life of the debentures.

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Table of Contents

BENJAMIN FRANKLIN BANCORP, M.H.C. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in Thousands)

11. INCOME TAXES

     Allocation of the federal and state income taxes between current and deferred portions is as follows:

                                         
    Nine Months Ended    
    September 30,
   Years Ended December 31,
    2004
   2003
   2003
   2002
   2001
    (Unaudited)                        
Current tax provision (benefit):
                                        
Federal
   $ 473     $ 752     $ 863     $ 1,304     $ (546 )
State
     105       158       125       144       175  
 
    
 		      
 		      
 		      
 		      
 		  
 
     578       910       988       1,448       (371 )
 
    
 		      
 		      
 		      
 		      
 		  
Deferred tax provision (benefit):
                                        
Federal
     27       (140 )     (73 )     (221 )     977  
State
     16       (67 )     (44 )     (260 )     (17 )
 
    
 		      
 		      
 		      
 		      
 		  
 
     43       (207 )     (117 )     (481 )     960  
Change in valuation reserve
     5       (52 )     (52 )     (524 )     1,021  
 
    
 		      
 		      
 		      
 		      
 		  
 
     48       (259 )     (169 )     (1,005 )     1,981  
 
    
 		      
 		      
 		      
 		      
 		  
Total tax provision
   $ 626     $ 651     $ 819     $ 443     $ 1,610  
 
    
 		      
 		      
 		      
 		      
 		  

    The reasons for the differences between the statutory federal income tax rate and the effective tax rates are summarized as follows:

                                         
    Nine Months Ended    
    September 30,
   Years Ended December 31,
    2004
   2003
   2003
   2002
   2001
    (Unaudited)                        
Statutory rate
     34.0 %     34.0 %     34.0 %     34.0 %     34.0 %
Increase (decrease) resulting from:
                                        
State taxes, net of federal tax
     4.1       3.0       2.1       (2.4 )     6.3  
Change in valuation reserve
     —       (2.5 )     (2.1 )     (16.7 )     61.9  
Officers’ life insurance
     (1.8 )     (2.1 )     (3.4 )     (0.5 )     —  
Change in estimate
     (4.0 )     —       —       —       —  
Other, net
     —       (0.3 )     2.1       (0.3 )     (4.7 )
 
    
 		      
 		      
 		      
 		      
 		  
Effective tax rates
     32.3 %     32.1 %     32.7 %     14.1 %     97.5 %
 
    
 		      
 		      
 		      
 		      
 		  

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Table of Contents

BENJAMIN FRANKLIN BANCORP, M.H.C. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in Thousands)

    INCOME TAXES (continued)
 
    The components of the net deferred tax liability, included in other liabilities, are as follows:

                         
    September 30,   December 31,
    2004
   2003
   2002
    (Unaudited)                
Deferred tax liability:
                        
Federal
   $ 1,223     $ 1,153     $ 1,345  
State
     399       370       399  
 
    
 		      
 		      
 		  
 
     1,622       1,523       1,744  
 
    
 		      
 		      
 		  
Deferred tax asset:
                        
Federal
     (3,438 )     (3,339 )     (3,250 )
State
     (397 )     (372 )     (319 )
 
    
 		      
 		      
 		  
 
     (3,835 )     (3,711 )     (3,569 )
Valuation reserve
     2,278       2,273       2,325  
 
    
 		      
 		      
 		  
 
     (1,557 )     (1,438 )     (1,244 )
 
    
 		      
 		      
 		  
Net deferred tax liability
   $ 65     $ 85     $ 500  
 
    
 		      
 		      
 		  

    The tax effects of each type of income and expense item that give rise to deferred taxes are as follows:

                         
    September 30,   December 31,
    2004
   2003
   2002
    (Unaudited)                
Allowance for loan losses
   $ (1,150 )   $ (959 )   $ (852 )
Employee benefit plans
     (84 )     (151 )     (139 )
Net unrealized gain/loss on securities available for sale
     (189 )     (121 )     125  
Depreciation and amortization
     615       604       573  
Net deferred loan costs
     484       297       239  
Mortgage servicing rights
     295       353       364  
Capital loss carryforward
     (2,278 )     (2,273 )     (2,325 )
Other, net
     94       62       190  
 
    
 		      
 		      
 		  
 
     (2,213 )     (2,188 )     (1,825 )
Valuation reserve
     2,278       2,273       2,325  
 
    
 		      
 		      
 		  
 
   $ 65     $ 85     $ 500  
 
    
 		      
 		      
 		  

    At September 30, 2004 (unaudited) and December 31, 2003, the Company has a capital loss carryover of $6,701 and $6,684, respectively, available to offset future capital gains which expires in 2006. The change in the valuation reserve for the nine months ended September 30, 2004 (unaudited) and the year ended December 31, 2003 is due to the change in the capital loss carryforward.

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BENJAMIN FRANKLIN BANCORP, M.H.C. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in Thousands)

    INCOME TAXES (concluded)
 
    The federal income tax reserve for loan losses at the Bank’s base year amounted to $3,055. If any portion of the reserve is used for purposes other than to absorb loan losses, approximately 150% of the amount actually used (limited to the amount of the reserve) would be subject to taxation in the year in which used. As the Bank intends to use the reserve only to absorb loan losses, a deferred tax liability of $1,253 has not been provided.
 
12.   COMMITMENTS AND CONTINGENCIES
 
    In the normal course of business, there are outstanding commitments which are not reflected in the accompanying consolidated financial statements.
 
    Loan commitments
 
    The Bank is a party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and advance funds on outstanding lines-of-credit. Such commitments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the consolidated balance sheets.
 
    The Bank’s exposure to credit loss is represented by the contractual amount of the commitments. The Bank uses the same credit policies in making commitments as it does for on-balance-sheet instruments.
 
    At September 30, 2004 (unaudited), December 31, 2003 and 2002, the following financial instruments were outstanding whose contract amounts represent credit risk:

                         
    September 30,
   December 31,
    2004
   2003
   2002
    (Unaudited)                
Commitments to grant loans
   $ 7,055     $ 11,567     $ 16,123  
Commitments to purchase loans
     —       2,953       540  
Unadvanced funds on construction loans
     11,483       10,264       9,722  
Unadvanced funds on home equity lines-of-credit
     28,839       24,812       19,250  
Unadvanced funds on commercial lines-of-credit
     3,412       3,717       4,412  
Unadvanced funds on personal lines-of-credit
     2,158       2,200       2,443  

F-31

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BENJAMIN FRANKLIN BANCORP, M.H.C. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in Thousands)

    COMMITMENTS AND CONTINGENCIES (concluded)
 
    Loan commitments (concluded)
 
    Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. The commitments for lines-of-credit may expire without being drawn upon, therefore, the total commitment amounts do not necessarily represent future cash requirements. The Bank evaluates each customer’s credit worthiness on a case-by-case basis. Funds disbursed under commitments to grant loans and home equity lines-of-credit are primarily secured by real estate, and commercial lines-of-credit are generally secured by business assets. Personal lines-of-credit are unsecured.
 
    Other commitments
 
    As of September 30, 2004 (unaudited) and December 31, 2003, the Bank had entered into two purchase and sale agreements to sell two parcels of land, one located in Medway, Massachusetts for $450 and the other located in Wrentham, Massachusetts for $400.
 
    Derivative financial instruments
 
    The Bank uses various derivative instruments for mortgage banking activities. These transactions involve both credit and market risk.
 
    From time to time, the Bank enters into rate lock agreements with individual borrowers which require the Bank to originate a loan at a specific interest rate upon completion of various underwriting requirements. In addition, the Bank generally enters into investor loan sale commitments which represent agreements to sell these loans to investors at a predetermined price. If the individual loan is not available for sale (i.e. the loan does not close), the Bank may fill the commitment with a similar loan, or pay a fee to terminate the contract. At September 30, 2004 (unaudited), December 31, 2003 and 2002, the Bank had $404, $715 and $14,329, respectively, in loan commitments to sell mortgage loans under rate lock agreements with borrowers. At September 30, 2004 (unaudited), December 31, 2003 and 2002, the Bank had $751, $715 and $14,329, respectively, in outstanding investor loan sale commitments.
 
    Other contingencies
 
    Various legal claims also arise from time to time in the normal course of business which, in the opinion of management, will have no material effect on the Company’s consolidated financial statements.

F-32

Table of Contents

BENJAMIN FRANKLIN BANCORP, M.H.C. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in Thousands)

13.   MINIMUM REGULATORY CAPITAL REQUIREMENTS
 
    The Company and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s and the Bank’s consolidated financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Bank must meet specific capital guidelines that involve quantitative measures of its assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. Mutual holding companies are not covered by the prompt corrective action provisions of the capital guidelines.
 
    Quantitative measures established by regulation to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and ratios (set forth in the following table) of total and Tier 1 capital (as defined) to risk-weighted assets (as defined) and of Tier 1 capital to average assets (as defined). Management believes, as of September 30, 2004 (unaudited), December 31, 2003 and 2002, that the Company and the Bank meet all capital adequacy requirements to which they are subject.

F-33

Table of Contents

BENJAMIN FRANKLIN BANCORP, M.H.C. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in Thousands)

MINIMUM REGULATORY CAPITAL REQUIREMENTS (continued)

    As of December 31, 2003, the most recent notification from the Federal Deposit Insurance Corporation categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, the Bank must maintain minimum total risk-based, Tier 1 risk-based and Tier 1 leverage ratios as set forth in the following table. There are no conditions or events since the notification that management believes have changed the Bank’s category. The Company’s and the Bank’s actual capital amounts and ratios as of September 30, 2004 (unaudited), December 31, 2003 and 2002 are also presented in the table.

                                                 
                                    Minimum
                                    To Be Well
                    Minimum   Capitalized Under
                    Capital   Prompt Corrective
    Actual
   Requirements
   Action Provisions
    Amount
   Ratio
   Amount
   Ratio
   Amount
   Ratio
September 30, 2004 (Unaudited):
                                                
Total capital to risk weighted assets:
                                                
Consolidated
   $ 40,298       12.7 %   $ 25,476       8.0 %     N/A       N/A  
Bank
     39,498       12.5       25,371       8.0     $ 31,714       10.0 %
Tier 1 capital to risk weighted assets:
                                                
Consolidated
     37,281       11.7       12,738       4.0       N/A       N/A  
Bank
     36,481       11.5       12,685       4.0       19,028       6.0  
Tier 1 capital to average assets:
                                                
Consolidated
     37,281       7.4       20,093       4.0       N/A       N/A  
Bank
     36,481       7.3       20,059       4.0       25,074       5.0  
December 31, 2003:
                                                
Total capital to risk weighted assets:
                                                
Consolidated
   $ 38,357       14.2 %   $ 21,647       8.0 %     N/A       N/A  
Bank
     37,717       13.9       21,647       8.0     $ 27,058       10.0 %
Tier 1 capital to risk weighted assets:
                                                
Consolidated
     35,779       13.2       10,823       4.0       N/A       N/A  
Bank
     35,194       13.0       10,823       4.0       16,235       6.0  
Tier 1 capital to average assets:
                                                
Consolidated
     35,779       7.8       18,461       4.0       N/A       N/A  
Bank
     35,194       7.6       18,416       4.0       23,020       5.0  

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BENJAMIN FRANKLIN BANCORP, M.H.C. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in Thousands)

MINIMUM REGULATORY CAPITAL REQUIREMENTS (concluded)

                                                 
                                    Minimum
                                    To Be Well
                    Minimum   Capitalized Under
                    Capital   Prompt Corrective
    Actual
   Requirements
   Action Provisions
    Amount
   Ratio
   Amount
   Ratio
   Amount
   Ratio
December 31, 2002:
                                                
Total capital to risk weighted assets:
                                                
Consolidated
   $ 36,276       13.8 %   $ 20,988       8.0 %     N/A       N/A  
Bank
     35,527       13.5       20,988       8.0     $ 26,235       10.0 %
Tier 1 capital to risk weighted assets:
                                                
Consolidated
     33,285       12.7       10,494       4.0       N/A       N/A  
Bank
     33,215       12.7       10,494       4.0       15,741       6.0  
Tier 1 capital to average assets:
                                                
Consolidated
     33,285       7.4       17,942       4.0       N/A       N/A  
Bank
     33,215       7.4       17,933       4.0       22,416       5.0  

14.   EMPLOYEE BENEFIT PLANS
 
    Pension plan

The Bank had provided pension benefits for eligible employees electing participation through the Savings Bank’s Employee Retirement Association’s (SBERA) Pension Plan (the “Plan”). Effective December 31, 2000, the Bank elected to curtail the pension plan subject to the Bank’s capital to assets ratio exceeding 7%. As the Bank exceeded the required capital ratio during the year ended December 31, 2002, a curtailment loss of $741 was recognized. Effective August 14, 2003, assets of the Plan were fully settled and allocated to the participants.

     401(k) plan

The Bank adopted a 401(k) savings plan, which provides for voluntary contributions by participating employees up to seventy-five percent of their compensation, subject to certain limitations. Under the terms of the plan, the Bank at its discretion will match two hundred percent of an employee’s contribution to the 401(k) plan subject to a maximum of 6% of the employee’s compensation. Total expense under the 401(k) plan for the nine months ended September 30, 2004 and 2003 (unaudited) and years ended December 31, 2003, 2002 and 2001, amounted to $279, $321, $437, $413 and $418, respectively.

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BENJAMIN FRANKLIN BANCORP, M.H.C. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in Thousands)

    EMPLOYEE BENEFIT PLANS (concluded)
 
    Supplemental executive plan
 
    The Bank has adopted a Supplemental Executive Retirement Plan, which provides for certain of the Bank’s executives to receive monthly benefits upon retirement, subject to certain limitations as set forth in the Plan. The present value of these future benefits is accrued over the executives’ terms of employment, and the expense for the nine months ended September 30, 2004 and 2003 (unaudited) and years ended December 31, 2003, 2002 and 2001 amounted to $78, $71, $101, $70 and $60, respectively.
 
    Executive employment agreement
 
    The Bank has entered into an Executive Employment Agreement with the President which expires on December 31, 2006 and provides for, among other things, an annual base salary and severance upon termination of employment. However, such employment may be terminated for cause, as defined, without incurring any continuing obligation. The agreement also provides for automatic extensions for one year on the anniversary date of the agreement.
 
15.   LOANS TO RELATED PARTIES
 
    In the ordinary course of business, the Bank grants loans to its officers and directors and their affiliates as follows:

                         
    Nine Months Ended   Years Ended December 31,
    September 30,        
    2004
   2003
   2002
    (Unaudited)                
Beginning balance
   $ 2,563     $ 2,759     $ 2,477  
Originations
     369       1,216       1,338  
Payments and change in status
     (504 )     (1,412 )     (1,056 )
 
    
 		      
 		      
 		  
Ending balance
   $ 2,428     $ 2,563     $ 2,759  
 
    
 		      
 		      
 		  

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Table of Contents

BENJAMIN FRANKLIN BANCORP, M.H.C. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in Thousands)

16.   FAIR VALUE OF FINANCIAL INSTRUMENTS
 
    The fair value of a financial instrument is the current amount that would be exchanged between willing parties, other than in a forced liquidation. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for the Company’s various financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument. Statement of Financial Accounting Standards No. SFAS 107, Disclosures about Fair Value of Financial Instruments, excludes certain financial instruments and all nonfinancial instruments from its disclosure requirements. Accordingly, the aggregate fair value amounts presented may not necessarily represent the underlying fair value of the Company.
 
    The following methods and assumptions were used by the Company in estimating fair value disclosures for financial instruments:

    Cash and cash equivalents: The carrying amounts of these instruments approximate fair values.
 
    Securities: Fair values for securities, excluding restricted equity securities, are based on quoted market prices. The carrying value of restricted equity securities approximates fair value based on the redemption provisions of the issuers.
 
    Loans: For variable-rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values. Fair values for residential mortgage loans and certain consumer loans are generally based on quoted market prices of similar loans sold in conjunction with securitization transactions, adjusted for differences in loan characteristics. Fair values for commercial real estate and investment property mortgage loans, commercial and industrial loans and certain consumer loans are estimated using discounted cash flow analyses, using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality. Fair values for non-performing loans are estimated using the lower of underlying collateral values or cost.

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BENJAMIN FRANKLIN BANCORP, M.H.C. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in Thousands)

FAIR VALUE OF FINANCIAL INSTRUMENTS (concluded)

    Deposits: The fair values disclosed for non-certificate accounts are, by definition, equal to the amount payable on demand at the reporting date which is the carrying amount. Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on time deposits.
 
    Short-term borrowings: The carrying amounts of short-term borrowings approximate fair value.
 
    Long-term debt: Fair values of long-term debt are estimated using discounted cash flow analyses based on the Company’s current incremental borrowing rates for similar types of borrowing arrangements.
 
    Accrued interest: The carrying amount of accrued interest approximates fair value.
 
    Off-balance-sheet instruments: Fair values for off-balance-sheet lending commitments are based on fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties’ credit standing. The fair value of these instruments is not material.
 
    The estimated fair values, and related carrying amounts, of the Company’s financial instruments are as follows:

                                                 
    September 30,   December 31,
    2004
   2003
   2002
    Carrying   Fair   Carrying   Fair   Carrying   Fair
    Amount
   Value
   Amount
   Value
   Amount
   Value
    (Unaudited)                                
Financial assets:
                                                
Cash and cash equivalents
   $ 15,126     $ 15,126     $ 35,485     $ 35,485     $ 52,036     $ 52,036  
Securities available for sale
     94,423       94,423       102,646       102,646       108,520       108,520  
Securities held to maturity
     266       271       386       398       986       1,023  
Restricted equity securities
     6,862       6,862       7,222       7,222       5,222       5,222  
Loans, net
     375,516       374,133       288,862       288,535       261,933       279,443  
Accrued interest receivable
     1,495       1,495       1,388       1,388       1,299       1,299  
Financial liabilities:
                                                
Deposits
     399,562       399,816       380,257       381,479       373,300       374,518  
Short-term borrowings
     29,000       29,000       —       —       —       —  
Long-term debt
     55,000       58,036       45,000       46,461       45,000       47,852  
Accrued interest payable
     263       263       225       225       254       254  

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BENJAMIN FRANKLIN BANCORP, M.H.C. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in Thousands)

17.   SUBSEQUENT EVENTS
 
    Stock Conversion
 
    On October 28, 2004, the Board of Trustees of the Company adopted a Plan of Conversion (the “Plan”) whereby the Company will convert to a Massachusetts-chartered stock corporation known as Benjamin Franklin Bancorp, Inc. (the “Stock Holding Company”) and offer Stock Holding Company stock on a priority basis to qualifying depositors, tax-qualified employee plans, and employees, officers, directors and trustees of the Bank and the Company, with any remaining shares to be offered to the public in a direct community offering and possibly in a syndicated community offering (the “Conversion”).
 
    As part of the Conversion, the Company will establish a liquidation account in an amount equal to the net worth of the Company as of the date of the latest consolidated balance sheet appearing in the final prospectus distributed in connection with the Conversion. The liquidation account will be maintained for the benefit of eligible account holders and supplemental eligible account holders who maintain their accounts at the Company after the Conversion. The liquidation account will be reduced annually to the extent that such account holders have reduced their qualifying deposits as of each anniversary date. Subsequent increases will not restore an account holder’s interest in the liquidation account. In the event of a complete liquidation, each eligible account holder will be entitled to receive balances for accounts then held.
 
    Subsequent to the Conversion, the Company may not declare or pay dividends on, and may not repurchase, any of its shares of common stock if the effect thereof would cause stockholders’ equity to be reduced below applicable regulatory capital maintenance requirements or if such declaration, payment or repurchase would otherwise violate regulatory requirements.
 
    Conversion costs will be deferred and reduce the proceeds from the shares sold in the Conversion. If the Conversion is not completed, all costs will be expensed. As of September 30, 2004, no Conversion costs have been incurred.
 
    As part of the Conversion, the Bank intends to enter into employment agreements or change of control agreements with certain executive officers, which in the case of the President would replace his existing employment agreement. In addition, as part of the Conversion, the Bank intends to implement an employee stock ownership plan and other benefit and salary continuation plans for directors, officers and employees.

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BENJAMIN FRANKLIN BANCORP, M.H.C. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Concluded)

(Dollars in Thousands)

    SUBSEQUENT EVENTS (concluded)
 
    Charitable Foundation
 
    As part of the Conversion, the Company intends to form a charitable foundation (the “Foundation”) by donating to the Foundation a number of shares of its authorized but unissued common stock in an amount up to 8% of the lesser of (i) the number of shares actually sold in the Conversion or (ii) the number of shares that would have been sold at the midpoint of the estimated valuation range of the Conversion.
 
    Merger Agreement
 
    On September 1, 2004, the Company and the Bank signed an Agreement and Plan of Merger with Chart Bank, A Cooperative Bank (“Chart”), a Massachusetts-chartered stock bank located in Waltham, Massachusetts, whereby Chart, subject to the Company’s Conversion, will be acquired by the Company and merged into the Bank.
 
    Upon completion of the Company’s Conversion, each share of Chart’s common stock issued and outstanding immediately prior to the merger shall be converted into, and shall be cancelled in exchange for, the right to receive 3.075 shares of the Company’s common stock or a cash amount equal to $30.75 per share of Chart’s common stock. The per share stock consideration assumes a $10 per share price for the Company’s common stock to be sold in the Conversion. In addition, each option to purchase Chart’s stock outstanding at the effective date of the merger, whether or not vested, shall be terminated and each grantee thereof shall be entitled to receive an amount of cash equal to the excess of the $30.75 per share cash consideration over the option exercise price.
 
    The merger is subject to regulatory approval and satisfaction of certain closing conditions.
 
    The Conversion and merger of Chart are expected to close on the same day and at substantially the same time, however, the Conversion is not conditioned upon the merger of Chart.

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CHART BANK, A COOPERATIVE BANK

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

         
    Page
Independent Auditors’ Report
     G-2  
Consolidated Balance Sheets as of September 30, 2004 (unaudited) and December 31, 2003 and 2002
     G-3  
Consolidated Statements of Income for the Nine Months Ended September 30, 2004 and 2003 (unaudited) and for the Years Ended December 31, 2003 and 2002
     G-4  
Consolidated Statements of Changes in Stockholders’ Equity for the Nine Months Ended September 30, 2004 and 2003 (unaudited) and for the Years Ended December 31, 2003 and 2002
     G-5  
Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2004 and 2003 (unaudited) and for the Years Ended December 31, 2003 and 2002
     G-6  
Notes to Consolidated Financial Statements
     G-8  

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Table of Contents

INDEPENDENT AUDITORS’ REPORT

To the Board of Directors and Stockholders of
Chart Bank, A Cooperative Bank
Waltham, Massachusetts

We have audited the accompanying consolidated balance sheets of Chart Bank, A Cooperative Bank and subsidiaries, as of December 31, 2003 and 2002, and the related consolidated statements of income, changes in stockholders’ equity and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Bank’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Chart Bank, A Cooperative Bank and subsidiaries as of December 31, 2003 and 2002, and the results of their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

WOLF & COMPANY, P.C.

Boston, Massachusetts
February 20, 2004, except for Note 13 as to which
     the date is September 1, 2004

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CHART BANK, A COOPERATIVE BANK AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Dollars in Thousands)

                         
    September 30,   December 31,
    2004
   2003
   2002
    (Unaudited)                
ASSETS
Cash and due from banks
   $ 35,808     $ 32,882     $ 33,663  
Short-term investments
     2,965       1,992       11,090  
 
    
 		      
 		      
 		  
Total cash and cash equivalents
     38,773       34,874       44,753  
 
    
 		      
 		      
 		  
Securities available for sale, at fair value
     3,669       5,404       16,506  
Securities held to maturity, at amortized cost
     31,826       23,965       13,026  
Loans
     177,325       141,547       124,501  
Allowance for loan losses
     (1,753 )     (1,657 )     (1,536 )
 
    
 		      
 		      
 		  
Loans, net
     175,572       139,890       122,965  
 
    
 		      
 		      
 		  
Banking premises and equipment, net
     2,171       2,400       2,594  
Federal Home Loan Bank stock, at cost
     1,662       1,060       1,060  
Co-operative Central Bank deposit
     536       536       536  
Accrued interest receivable
     966       816       779  
Deferred income taxes
     348       352       257  
Other assets
     738       557       456  
 
    
 		      
 		      
 		  
 
   $ 256,261     $ 209,854     $ 202,932  
 
    
 		      
 		      
 		  
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits
   $ 215,972     $ 175,801     $ 170,279  
Federal Home Loan Bank advances:
                        
Short-term
     11,000       5,202       4,000  
Long-term
     11,000       10,728       10,986  
Mortgagors’ escrow accounts
     417       307       280  
Other liabilities
     326       417       1,326  
 
    
 		      
 		      
 		  
Total liabilities
     238,715       192,455       186,871  
 
    
 		      
 		      
 		  
Commitments and contingencies (Note 11)
                       
Stockholders’ equity:
                        
Preferred stock; $1 par value, 3,000,000 shares authorized; none issued
     —       —       —  
Common stock - - Series B; $1 par value; 3,000,000 shares authorized; none issued
     —       —       —  
Common stock - - Series A; $1 par value; 3,000,000 shares authorized; 1,420,000 shares issued and outstanding
     1,420       1,420       1,420  
Additional paid-in capital
     11,575       11,575       11,575  
Retained earnings
     4,524       4,337       2,848  
Accumulated other comprehensive income
     27       67       218  
 
    
 		      
 		      
 		  
Total stockholders’ equity
     17,546       17,399       16,061  
 
    
 		      
 		      
 		  
 
   $ 256,261     $ 209,854     $ 202,932  
 
    
 		      
 		      
 		  

See accompanying notes to consolidated financial statements.

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CHART BANK, A COOPERATIVE BANK AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Dollars in Thousands)

                                 
    Nine Months Ended    
    September 30,
   Years Ended December 31,
    2004
   2003
   2003
   2002
    (Unaudited)                
Interest and dividend income:
                                
Interest and fees on loans
   $ 7,225     $ 6,747     $ 8,971     $ 9,573  
Interest and dividends on securities:
                                
Taxable interest on securities
     667       775       990       1,218  
Dividends on securities
     57       24       31       39  
Other interest income
     57       75       99       203  
 
    
 		      
 		      
 		      
 		  
Total interest and dividend income
     8,006       7,621       10,091       11,033  
 
    
 		      
 		      
 		      
 		  
Interest expense:
                                
Interest on deposits
     2,331       2,332       3,014       3,909  
Interest on borrowed funds:
                                
Short-term
     178       126       148       153  
Long-term
     223       190       290       404  
 
    
 		      
 		      
 		      
 		  
Total interest expense
     2,732       2,648       3,452       4,466  
 
    
 		      
 		      
 		      
 		  
Net interest income
     5,274       4,973       6,639       6,567  
Provision for loan losses
     90       90       120       120  
 
    
 		      
 		      
 		      
 		  
Net interest income, after provision for loan losses
     5,184       4,883       6,519       6,447  
 
    
 		      
 		      
 		      
 		  
Other income:
                                
ATM service contract fees
     1,368       1,344       1,755       1,437  
Customer service fees
     446       535       713       611  
Loan referral fees
     29       155       158       747  
Gain on sale of banking premises
     —       —       —       316  
Net gain on sales and redemptions of securities
     53       6       6       85  
Miscellaneous income
     20       8       33       74  
 
    
 		      
 		      
 		      
 		  
Total other income
     1,916       2,048       2,665       3,270  
 
    
 		      
 		      
 		      
 		  
Operating expenses:
                                
Salaries and employee benefits
     2,775       2,430       3,279       3,711  
Occupancy and equipment
     927       958       1,260       1,261  
Professional services
     293       240       343       389  
Advertising and marketing
     268       187       242       371  
Data processing
     423       333       433       518  
Merger expenses
     382       —       —       —  
Other general and administrative
     568       658       849       940  
 
    
 		      
 		      
 		      
 		  
Total operating expenses
     5,636       4,806       6,406       7,190  
 
    
 		      
 		      
 		      
 		  
Income before income taxes
     1,464       2,125       2,778       2,527  
Income tax provision
     680       823       1,076       958  
 
    
 		      
 		      
 		      
 		  
Net income
   $ 784     $ 1,302     $ 1,702     $ 1,569  
 
    
 		      
 		      
 		      
 		  

See accompanying notes to consolidated financial statements.

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CHART BANK, A COOPERATIVE BANK AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

Nine Months Ended September 30, 2004 (Unaudited) and
Years Ended December 31, 2003 and 2002

(Dollars in Thousands)

                                                 
                                    Accumulated    
    Common Stock
   Additional           Other   Total
      Paid-in   Retained   Comprehensive   Stockholders’
    Shares
   Amount
   Capital
   Earnings
   Income
   Equity
Balance at December 31, 2001
     1,420     $ 1,420     $ 11,575     $ 1,634     $ 351     $ 14,980  
 
                                            
 		  
Comprehensive income:
                                                
Net income
     —       —       —       1,569       —       1,569  
Change in net unrealized gain/loss on securities available for sale, net of reclassification adjustment and tax effects
     —       —       —       —       (133 )     (133 )
 
                                            
 		  
Total comprehensive income
                                             1,436  
 
                                            
 		  
Cash dividends declared ($.25 per share)
     —       —       —       (355 )     —       (355 )
 
    
 		      
 		      
 		      
 		      
 		      
 		  
Balance at December 31, 2002
     1,420       1,420       11,575       2,848       218       16,061  
 
                                            
 		  
Comprehensive income:
                                                
Net income
     —       —       —       1,702       —       1,702  
Change in net unrealized gain/loss on securities available for sale, net of reclassification adjustment and tax effects
     —       —       —       —       (151 )     (151 )
 
                                            
 		  
Total comprehensive income
                                             1,551  
 
                                            
 		  
Cash dividends declared ($.15 per share)
     —       —       —       (213 )     —       (213 )
 
    
 		      
 		      
 		      
 		      
 		      
 		  
Balance at December 31, 2003
     1,420       1,420       11,575       4,337       67       17,399  
 
                                            
 		  
Comprehensive income:
                                                
Net income (unaudited)
     —       —       —       784       —       784  
Change in net unrealized gain/loss on securities available for sale, net of reclassification adjustment and tax effects (unaudited)
     —       —       —       —       (40 )     (40 )
 
                                            
 		  
Total comprehensive income (unaudited)
                                             744  
 
                                            
 		  
Cash dividends declared ($.42 per share) (unaudited)
     —       —       —       (597 )     —       (597 )
 
    
 		      
 		      
 		      
 		      
 		      
 		  
Balance at September 30, 2004 (unaudited)
     1,420     $ 1,420     $ 11,575     $ 4,524     $ 27     $ 17,546  
 
    
 		      
 		      
 		      
 		      
 		      
 		  

See accompanying notes to consolidated financial statements.

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CHART BANK, A COOPERATIVE BANK AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in Thousands)

                                 
    Nine Months Ended    
    September 30,
   Years Ended December 31,
    2004
   2003
   2003
   2002
    (Unaudited)                
Cash flows from operating activities:
                                
Net income
   $ 784     $ 1,302     $ 1,702     $ 1,569  
Adjustments to reconcile net income to net cash provided by operating activities:
                                
Provision for loan losses
     90       90       120       120  
Gain on sale of banking premises
     —       —       —       (316 )
Net gain on sales and redemptions of securities
     (53 )     (6 )     (6 )     (85 )
Depreciation and amortization
     307       320       429       434  
Deferred tax provision (benefit)
     30       5       6       (49 )
Net (increase) decrease in accrued interest receivable
     (150 )     (14 )     (37 )     71  
Other, net
     (243 )     (928 )     (961 )     533  
 
    
 		      
 		      
 		      
 		  
Net cash provided by operating activities
     765       769       1,253       2,277  
 
    
 		      
 		      
 		      
 		  
Cash flows from investing activities:
                                
Activity in securities available for sale:
                                
Maturities and redemptions
     3,158       10,331       10,831       11,901  
Sales
     900       —       —       2,567  
Purchases
     (2,346 )     —       —       (9,550 )
Activity in securities held to maturity:
                                
Maturities and redemptions
     5,482       10,614       12,114       1,999  
Purchases
     (13,362 )     (19,081 )     (23,077 )     (15,031 )
Net (increase) decrease in loans
     (35,772 )     (8,404 )     (17,045 )     3,003  
Purchase of banking premises and equipment
     (78 )     (197 )     (235 )     (405 )
Proceeds from the sale of banking premises
     —       —       —       475  
Purchase of Federal Home Loan Bank stock
     (602 )     —       —       (73 )
 
    
 		      
 		      
 		      
 		  
Net cash used by investing activities
     (42,620 )     (6,737 )     (17,412 )     (5,114 )
 
    
 		      
 		      
 		      
 		  

(continued)

See accompanying notes to consolidated financial statements.

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CHART BANK, A COOPERATIVE BANK AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Concluded)

(Dollars in Thousands)

                                 
    Nine Months Ended    
    September 30,
   Years Ended December 31,
    2004
   2003
   2003
   2002
    (Unaudited)                
Cash flows from financing activities:
                                
Net increase in deposits
     40,171       1,948       5,522       24,730  
Activity in Federal Home Loan Bank advances:
                                
Net increase (decrease) in advances with maturities within three months
     (5,202 )     (4,000 )     1,202       (1,004 )
Proceeds from issuance of advances with maturities greater than three months
     15,000       3,000       3,000       7,500  
Repayments of advances with maturities greater than three months
     (3,728 )     (192 )     (3,258 )     (11,241 )
Net change in mortgagors’ escrow accounts
     110       49       27       (79 )
Cash dividends paid on common stock
     (597 )     (213 )     (213 )     (355 )
 
    
 		      
 		      
 		      
 		  
Net cash provided by financing activities
     45,754       592       6,280       19,551  
 
    
 		      
 		      
 		      
 		  
Net change in cash and cash equivalents
     3,899       (5,376 )     (9,879 )     16,714  
Cash and cash equivalents at beginning of period
     34,874       44,753       44,753       28,039  
 
    
 		      
 		      
 		      
 		  
Cash and cash equivalents at end of period
   $ 38,773     $ 39,377     $ 34,874     $ 44,753  
 
    
 		      
 		      
 		      
 		  
Supplemental cash flow information:
                                
Interest paid on deposits
   $ 2,326     $ 2,336     $ 3,015     $ 3,878  
Interest paid on borrowed funds
     394       315       439       564  
Net income tax payments
     654       862       1,139       1,281  

See accompanying notes to consolidated financial statements.

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Table of Contents

CHART BANK, A COOPERATIVE BANK AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Nine Months Ended September 30, 2004 and 2003 (Unaudited) and
Years Ended December 31, 2003 and 2002

(Dollars in Thousands)

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
    Basis of presentation and consolidation
 
    The consolidated financial statements include the accounts of Chart Bank, A Cooperative Bank (the “Bank”) and its wholly-owned subsidiaries, Creative Strategic Solutions, Inc. (“CSSI”), which provides electronic commerce, electronic funds transfer, automated teller machine services and related consulting services, and Weston Street Securities Corporation, which buys, sells and holds securities. All significant intercompany balances and transactions have been eliminated in consolidation.
 
    Unaudited interim financial statements
 
    The consolidated financial statements and related notes as of September 30, 2004 and for the nine months ended September 30, 2004 and 2003 are unaudited. All adjustments, consisting of only normal recurring adjustments, which in the opinion of management are necessary for fair presentation of the financial information, have been made.
 
    Business
 
    The Bank is a full service community bank that provides financial services, through its three offices in Waltham and Newton, including a complete line of personal and consumer accounts as well as an extensive line of commercial loan services to accounts in eastern Massachusetts. In addition, the Bank, through its subsidiary CSSI, provides electronic commerce, electronic funds transfer, automated teller machine services and related consulting services to the financial services industry, while offering services and specific products to third parties throughout the United States.
 
    Use of estimates
 
    In preparing consolidated financial statements in conformity with accounting principles generally accepted in the United States of America, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. A material estimate that is particularly susceptible to significant change in the near term relates to the determination of the allowance for loan losses.

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Table of Contents

CHART BANK, A COOPERATIVE BANK AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in Thousands)

    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
 
    Reclassifications
 
    Certain amounts in the 2002 consolidated financial statements have been reclassified to conform to the 2003 presentation.
 
    Cash and cash equivalents
 
    Cash equivalents include amounts due from banks and short-term investments, which consist of federal funds sold and investment in the Bank Investment Liquidity Fund. The Bank is required to maintain average balances on hand or with the Federal Reserve Bank. At September 30, 2004 (unaudited), December 31, 2003 and 2002, the required reserve balance amounted to $2,172, $1,160 and $1,080, respectively.
 
    Securities
 
    Securities that management has the positive intent and ability to hold to maturity are classified as held to maturity and recorded at amortized cost. All other securities are classified as available for sale and recorded at fair value, with unrealized gains and losses excluded from income and reported in other comprehensive income/loss.
 
    Discounts and premiums are recognized in income over the term of the securities, by the interest method. Gains and losses on disposition of securities are computed by the specific identification method.
 
    Loans
 
    The Bank grants mortgage and consumer loans to customers and a substantial portion of the loan portfolio is represented by mortgage loans in the Waltham and Newton areas. The ability of the Bank’s debtors to honor their contracts is dependent upon the real estate and economic sectors.
 
    Loans are reported at their outstanding principal balances, adjusted for charge-offs, the allowance for loan losses and any deferred fees or costs on originated loans.
 
    Interest is not accrued on loans, including impaired loans, ninety days or more past due, unless the loan is well-secured and in process of collection. Past due status is based on contractual terms of the loan. Interest income previously accrued on such loans is reversed against current period income. In addition, interest collected is applied to principal when management is uncertain as to the collectibility of the principal balance. Net deferred loan costs/fees are amortized over the life of the related loan on the interest method.

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Table of Contents

CHART BANK, A COOPERATIVE BANK AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in Thousands)

    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
 
    Loans (concluded)
 
    Loans are considered impaired when, based on current information and events, it is probable that a creditor will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Impairment is measured on a loan by loan basis by the fair value of the collateral.
 
    Allowance for loan losses
 
    The allowance for loan losses is established as losses are estimated to have occurred through a provision for loan losses charged to operations. Loan losses, including loan losses on impaired loans, are charged against the allowance when management believes the uncollectibility of the loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance.
 
    The allowance for loan losses is evaluated on a regular basis by management and is based upon management’s periodic review of the collectibility of the loans in light of known and inherent risks in the nature and volume of the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available.
 
    The allowance consists of allocated, general and unallocated components. The allocated component relates to loans that are classified as either substandard or loss. For such loans that are also classified as impaired, an allowance is established when the collateral value of the impaired loan is lower than the carrying value of that loan. The general component covers non-classified loans and is based on historical loss experience adjusted for qualitative factors. An unallocated component is maintained to cover uncertainties that could affect management’s estimate of probable losses. The unallocated component of the allowance reflects the margin of imprecision inherent in the underlying assumptions used in the methodologies for estimating losses in the portfolio.
 
    Banking premises and equipment
 
    Land is carried at cost. Building, leasehold improvements and equipment are stated at cost, less accumulated depreciation and amortization, computed principally on the straight-line method over the estimated useful lives of the assets or the anticipated term of the lease, if shorter.

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Table of Contents

CHART BANK, A COOPERATIVE BANK AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in Thousands)

    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
 
    Income taxes
 
    Deferred tax assets and liabilities are reflected at currently enacted income tax rates applicable to the period in which the deferred tax assets or liabilities are expected to be realized or settled. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted accordingly through the provision for income taxes. The Bank’s base amount of its federal income tax reserve for loan losses is a permanent difference for which there is no recognition of a deferred tax liability. However, the loan loss allowance maintained for financial reporting purposes is a temporary difference with allowable recognition of a related deferred tax asset, if it is deemed realizable.
 
    Transfers of financial assets
 
    Transfers of financial assets are accounted for as sales, when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Bank, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the Bank does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity.
 
    Advertising and marketing costs
 
    Advertising and marketing costs are expensed as incurred.
 
    Stock compensation plan
 
    In accordance with the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 123, “Accounting for Stock-Based Compensation,” the Bank has elected to measure compensation cost for its stock option plan using the intrinsic value based method of accounting prescribed by APB Opinion No. 25, “Accounting for Stock Issued to Employees,” whereby compensation cost is the excess, if any, of the quoted market price of the stock at the grant date (or other measurement date) over the amount an employee must pay to acquire the stock. Stock options issued under the Bank’s stock option plan have no intrinsic value at the grant date, and under Opinion No. 25 no compensation cost is recognized for them. The pro forma impact of accounting for stock options granted in accordance with SFAS No. 123 was not material.

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Table of Contents

CHART BANK, A COOPERATIVE BANK AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in Thousands)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

    Comprehensive income
 
    Accounting principles generally require that recognized revenue, expenses, gains and losses be included in net income. Although certain changes in assets and liabilities, such as unrealized gains and losses on securities available for sale, are reported as a separate component of the stockholders’ equity section of the consolidated balance sheet, such items, along with net income, are components of comprehensive income. The components of other comprehensive income/loss and related tax effects are as follows:

                                 
    Nine Months Ended    
    September 30,
   Years Ended December 31,
    2004
   2003
   2003
   2002
    (Unaudited)                
Change in unrealized holding gains/losses on securities available for sale
   $ (13 )   $ (201 )   $ (246 )   $ (136 )
Reclassification adjustment for gains realized in income
     (53 )     (6 )     (6 )     (85 )
 
    
 		      
 		      
 		      
 		  
 
     (66 )     (207 )     (252 )     (221 )
Tax effects
     26       83       101       88  
 
    
 		      
 		      
 		      
 		  
Net-of-tax amount
   $ (40 )   $ (124 )   $ (151 )   $ (133 )
 
    
 		      
 		      
 		      
 		  

    Recent accounting pronouncements
 
    On June 30, 2004, the Financial Accounting Standards Board (“FASB”) published an Exposure Draft, “Share-Based Payment,” an Amendment of SFAS Nos. 123 and 95 (the “Exposure Draft”). The Exposure Draft is proposing, among other things, amendments to SFAS No. 123 and thus, the manner in which share-based compensation, such as stock options, will be accounted for by both public and non-public companies. The Exposure Draft allows nonpublic entities, such as the Bank, to elect to measure compensation cost of awards of equity share options and similar instruments at intrinsic value through the date of settlement and therefore, is not expected to have a material impact on the Bank’s consolidated financial statements.

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Table of Contents

CHART BANK, A COOPERATIVE BANK AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in Thousands)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (concluded)

    Recent accounting pronouncements (concluded)
 
    On September 30, 2004, the FASB issued FASB Staff Position (“FSP”) Emerging Issues Task Force (“EITF”) Issue No. 03-1-1 delaying the effective date of paragraphs 10-20 of EITF 03-1, “The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments”, which provides guidance for determining the meaning of “other-than-temporarily impaired” and its application to certain debt and equity securities within the scope of SFAS No. 115, “Accounting for Certain Investments in Debt and Equity Securities”, and investments accounted for under the cost method. The guidance requires that investments which have declined in value due to credit concerns or solely due to changes in interest rates must be recorded as other-than-temporarily impaired unless the Bank can assert and demonstrate its intention to hold the security for a period of time sufficient to allow for a recovery of fair value up to or beyond the cost of the investment which might mean maturity. The delay of the effective date of EITF 03-1 will be superceded concurrent with the final issuance of proposed FSP Issue 03-1-a. Proposed FSP Issue 03-1-a is intended to provide implementation guidance with respect to all securities analyzed for impairment under paragraphs 10-20 of EITF 03-1. Management continues to closely monitor and evaluate how the provisions of EITF 03-1 and proposed FSP Issue 03-1-a will affect the Bank.
 
2.   SECURITIES
 
    The amortized cost, gross unrealized gains and losses and fair value of securities follows. At December 31, 2003 and 2002, all securities consisted of federal agency obligations.

                                 
            Gross   Gross    
    Amortized   Unrealized   Unrealized   Fair
    Cost
   Gains
   Losses
   Value
September 30, 2004 (unaudited)
                                
Securities available for sale:
                                
Federal agency obligations
   $ 2,009     $ 26     $ —     $ 2,035  
Marketable equity securities
     1,614       59       (39 )     1,634  
 
    
 		      
 		      
 		      
 		  
Total securities available for sale
   $ 3,623     $ 85     $ (39 )   $ 3,669  
 
    
 		      
 		      
 		      
 		  
Securities held to maturity:
                                
Federal agency obligations
   $ 31,826     $ 66     $ (150 )   $ 31,742  
 
    
 		      
 		      
 		      
 		  

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Table of Contents

CHART BANK, A COOPERATIVE BANK AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in Thousands)

    SECURITIES (continued)

                                 
            Gross   Gross    
    Amortized   Unrealized   Unrealized   Fair
    Cost
   Gains
   Losses
   Value
December 31, 2003
                                
Securities available for sale
   $ 5,292     $ 112     $ —     $ 5,404  
 
    
 		      
 		      
 		      
 		  
Securities held to maturity
   $ 23,965     $ 113     $ (118 )   $ 23,960  
 
    
 		      
 		      
 		      
 		  
December 31, 2002
                                
Securities available for sale
   $ 16,142     $ 364     $ —     $ 16,506  
 
    
 		      
 		      
 		      
 		  
Securities held to maturity
   $ 13,026     $ 146     $ —     $ 13,172  
 
    
 		      
 		      
 		      
 		  

    The carrying value and estimated fair value of debt securities by contractual maturity at September 30, 2004 (unaudited) and December 31, 2003, follows. Expected maturities may differ from contractual maturities because the issuer may have the right to call or prepay obligations with or without call or prepayment penalties.

                                 
    Available for Sale
   Held to Maturity
    Amortized   Fair   Amortized   Fair
    Cost
   Value
   Cost
   Value
September 30, 2004 (unaudited)
                                
Within 1 year
   $ 1,500     $ 1,514     $ —     $ —  
Over 1 year to 2 years
     509       521       17,019       16,967  
Over 2 years to 5 years
     —       —       14,807       14,775  
 
    
 		      
 		      
 		      
 		  
 
   $ 2,009     $ 2,035     $ 31,826     $ 31,742  
 
    
 		      
 		      
 		      
 		  
December 31, 2003
                                
Within 1 year
   $ 3,777     $ 3,826     $ —     $ —  
Over 1 year to 2 years
     1,515       1,578       3,002       3,051  
Over 2 years to 5 years
     —       —       20,963       20,909  
 
    
 		      
 		      
 		      
 		  
 
   $ 5,292     $ 5,404     $ 23,965     $ 23,960  
 
    
 		      
 		      
 		      
 		  

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Table of Contents

CHART BANK, A COOPERATIVE BANK AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in Thousands)

    SECURITIES (concluded)
 
    Proceeds from the sales of securities for the nine months ended September 30, 2004 (unaudited) amounted to $900, which realized gross gains of $54 and gross losses of $4. There were no sales of securities in 2003. Proceeds from sales of securities available for sale for the year ended December 31, 2002 amounted to $2,567, which realized gross gains of $68 and no losses.
 
    At September 30, 2004 (unaudited), December 31, 2003 and 2002, securities with a fair value of $6,559, $5,775 and $4,867, respectively, were pledged to secure municipal deposits, the Bank’s treasury, tax and loan account and funds advanced under the Federal Reserve borrowing agreement. (See Note 6.)
 
    At September 30, 2004 (unaudited), five marketable equity securities with a fair value of $173 had unrealized losses of $39 or 5% of cost. These unrealized losses have existed for less than twelve months and relate principally to the financial services industry. No credit issues have been identified that cause management to believe the declines are other-than-temporary.
 
    At September 30, 2004 (unaudited), eleven securities held to maturity with a fair value of $10,941 had unrealized losses of $110 or 1% of amortized cost in a continuous loss position for over twelve months. At September 30, 2003 (unaudited), twelve securities held to maturity with a fair value of $7,056 had unrealized losses of $40 or 1% of amortized cost in a continuous loss position for less than twelve months. The declines in value are due principally to the effect that rising interest rates have on the value of the securities. The securities are issued by government agencies, therefore impairment is not deemed to be other-than-temporary.
 
    At December 31, 2003, eleven securities held to maturity with a fair value of $11,950 had unrealized losses of $118, or 1% of amortized cost. All of these securities had been in a continuous loss position for less than twelve months. The decline in value is due principally to the effect that rising interest rates have on the value of the securities. The securities are issued by government agencies, therefore impairment is not deemed to be other-than-temporary.

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Table of Contents

CHART BANK, A COOPERATIVE BANK AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in Thousands)

3.   LOANS
 
    The composition of the balance of loans follows:

                         
            December 31,
    September 30,        
    2004
   2003
   2002
    (Unaudited)                
Real estate mortgage loans:
                        
Residential
   $ 58,072     $ 31,204     $ 29,079  
Home equity lines-of-credit
     6,881       6,462       4,640  
Commercial
     99,682       91,788       83,619  
Construction loans
     8,225       6,498       3,327  
 
    
 		      
 		      
 		  
 
     172,860       135,952       120,665  
 
    
 		      
 		      
 		  
Commercial loans:
                        
Secured
     4,029       3,913       3,182  
Unsecured
     95       512       255  
 
    
 		      
 		      
 		  
 
     4,124       4,425       3,437  
 
    
 		      
 		      
 		  
Consumer loans:
                        
Consumer share secured
     132       741       61  
Other consumer
     209       429       338  
 
    
 		      
 		      
 		  
 
     341       1,170       399  
 
    
 		      
 		      
 		  
Total loans
     177,325       141,547       124,501  
Allowance for loan losses
     (1,753 )     (1,657 )     (1,536 )
 
    
 		      
 		      
 		  
Loans, net
   $ 175,572     $ 139,890     $ 122,965  
 
    
 		      
 		      
 		  

    An analysis of the allowance for loan losses follows:

                                 
    Nine Months Ended   Years Ended
    September 30,
   December 31,
    2004
   2003
   2003
   2002
    (Unaudited)                
Balance at beginning of period
   $ 1,657     $ 1,536     $ 1,536     $ 1,387  
Provision for loan losses
     90       90       120       120  
Recoveries
     12       6       6       60  
Charge-offs
     (6 )     (5 )     (5 )     (31 )
 
    
 		      
 		      
 		      
 		  
Balance at end of period
   $ 1,753     $ 1,627     $ 1,657     $ 1,536  
 
    
 		      
 		      
 		      
 		  

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Table of Contents

CHART BANK, A COOPERATIVE BANK AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in Thousands)

    LOANS (concluded)
 
    At September 30, 2004 (unaudited), impaired and non-accrual loans amounted to $119. For the nine months ended September 30, 2004 and 2003 (unaudited), the average balance of impaired loans was $89 and $10, respectively, and $10 and $0, respectively, in interest income was recognized on impaired loans on the cash basis during the period they were impaired.
 
    At December 31, 2003, impaired and non-accrual loans amounted to $120. For the year ended December 31, 2003, the average balance of impaired loans was $40 and $1 in interest income was recognized on impaired loans on the cash basis during the period they were impaired. There were no non-accrual or impaired loans at or for the year ended December 31, 2002.
 
    At September 30, 2004 (unaudited) and December 31, 2003 and 2002, accruing loans past due greater than ninety days amounted to $25, 93 and $25, respectively.
 
    Mortgage loans serviced for others are not included in the accompanying consolidated balance sheets. The unpaid principal balance of mortgage loans serviced for others was $10,475, $10,553 and $10,945 at September 30, 2004 (unaudited), December 31, 2003 and 2002, respectively. Loans sold did not contain recourse provisions.
 
4.   BANKING PREMISES AND EQUIPMENT
 
    A summary of the cost and accumulated depreciation and amortization of banking premises and equipment follows:

                                 
            December 31,
    
    September 30,                   Estimated
    2004
   2003
   2002
   Useful Lives
    (Unaudited)                        
Banking premises:
                                
Land
   $ 380     $ 380     $ 380          
Building and improvements
     1,181       1,181       1,181     10-35 years
Leasehold improvements
     671       665       653     10 years
Furniture, fixtures and equipment
     2,862       2,790       2,578     3-10 years
 
    
 		      
 		      
 		          
 
     5,094       5,016       4,792          
Less accumulated depreciation and amortization
     (2,923 )     (2,616 )     (2,198 )        
 
    
 		      
 		      
 		          
 
   $ 2,171     $ 2,400     $ 2,594          
 
    
 		      
 		      
 		          

    Depreciation and amortization expense for the nine months ended September 30, 2004 and 2003 (unaudited) and the years ended December 31, 2003 and 2002 amounted to $307, $320, $429 and $434, respectively.

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Table of Contents

CHART BANK, A COOPERATIVE BANK AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in Thousands)

5.   DEPOSITS
 
    A summary of deposit balances by type follows:

                         
            December 31,
    September 30,        
    2004
   2003
   2002
    (Unaudited)                
Demand deposits
   $ 33,205     $ 30,458     $ 27,701  
NOW accounts
     11,266       9,601       9,384  
Money market deposits
     64,383       50,977       49,848  
Other savings accounts
     14,630       21,479       18,988  
 
    
 		      
 		      
 		  
Total non-certificate accounts
     123,484       112,515       105,921  
 
    
 		      
 		      
 		  
Term certificates less than $100
     48,762       32,013       38,094  
Term certificates of $100 or more
     43,726       31,273       26,264  
 
    
 		      
 		      
 		  
Total certificate accounts
     92,488       63,286       64,358  
 
    
 		      
 		      
 		  
 
   $ 215,972     $ 175,801     $ 170,279  
 
    
 		      
 		      
 		  

    A summary of term certificates by maturity at follows:

                                                 
    September 30,   December 31,
    2004
   2003
   2002
            Weighted           Weighted           Weighted
            Average           Average           Average
    Amount
   Rate
   Amount
   Rate
   Amount
   Rate
    (Unaudited)                                
Within 1 year
   $ 17,359       1.99 %   $ 20,600       1.71 %   $ 23,020       2.36 %
Over 1 year to 3 years
     70,041       2.72       39,684       2.89       39,859       4.05  
Over 3 years to 5 years
     5,088       3.59       3,002       3.38       1,479       5.48  
 
    
 		              
 		              
 		          
 
   $ 92,488       2.64 %   $ 63,286       2.53 %   $ 64,358       3.48 %
 
    
 		              
 		              
 		          

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Table of Contents

CHART BANK, A COOPERATIVE BANK AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in Thousands)

6.   BORROWED FUNDS
 
    Borrowed funds consist of advances from the Federal Home Loan Bank of Boston (“FHLB”). Short-term advances mature within one year and have a weighted average interest rate of 2.20%, 1.24% and 1.56% at September 30, 2004 (unaudited), December 31, 2003 and 2002, respectively. Long-term advances are as follows:

                                                 
    September 30,   December 31,
    2004
   2003
   2002
            Weighted           Weighted           Weighted
            Average           Average           Average
    Amount
   Rate
   Amount
   Rate
   Amount
   Rate
    (Unaudited)                                
Fixed-rate advances maturing:
                                                
2003
   $ —       — %   $ —       — %   $ 5,000       3.25 %
2004
     2,000       4.25       5,500       3.91       5,500       3.91  
2005
     4,000       1.44       —       —       —       —  
2006
     2,000       2.82       2,000       2.82       —       —  
2008
     3,000       3.79       3,000       3.79       —       —  
Amortizing advance, due September 30, 2004, requiring monthly principal and interest of $23,500
     —       —       228       6.38       486       6.38  
 
    
 		              
 		              
 		          
 
   $ 11,000       2.84 %   $ 10,728       3.73 %   $ 10,986       3.72 %
 
    
 		              
 		              
 		          

    At September 30, 2004 (unaudited), December 31, 2003 and 2002, the Bank’s unadvanced Ideal Way line of credit available from the FHLB amounted to $2,389, $187 and $2,389, respectively, at an interest rate that adjusts daily. All FHLB borrowings are secured primarily by a blanket lien on the Bank’s unencumbered residential real estate loan portfolio and at September 30, 2004 (unaudited), December 31, 2003 and 2002, $45,148, $27,793 and $11,265, respectively, in commercial real estate loans in accordance with the FHLB’s products policy.
 
    The Bank also maintains a borrowing agreement with the Federal Reserve Bank of Boston at an interest rate that adjusts daily. Advances are limited to the amount of collateral pledged. At September 30, 2004 (unaudited), December 31, 2003 and 2002, certain federal agency obligations are pledged as collateral under this agreement and no advances are outstanding.

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Table of Contents

CHART BANK, A COOPERATIVE BANK AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in Thousands)

7.   INCOME TAXES
 
    The allocation of income taxes between current and deferred portions is as follows:

                                 
    Nine Months Ended    
    September 30,
   Years Ended December 31,
    2004
   2003
   2003
   2002
    (Unaudited)
Current tax provision:
                                
Federal
   $ 533     $ 621     $ 872     $ 845  
State
     117       197       198       162  
 
    
 		      
 		      
 		      
 		  
 
     650       818       1,070       1,007  
 
    
 		      
 		      
 		      
 		  
Deferred tax provision (benefit):
                                
Federal
     22       4       5       (37 )
State
     8       1       1       (12 )
 
    
 		      
 		      
 		      
 		  
 
     30       5       6       (49 )
 
    
 		      
 		      
 		      
 		  
 
   $ 680     $ 823     $ 1,076     $ 958  
 
    
 		      
 		      
 		      
 		  

    For the nine months ended September 30, 2004 and 2003 (unaudited), and years ended December 31, 2003 and 2002, the reason for the difference between the statutory federal income tax rate of 34% and the effective rates of 46.4%, 38.7%, 38.7% and 37.9%, respectively, is state taxes, net of federal tax benefit and, for the nine months ended September 30, 2004 (unaudited), a 6.6% increase in the effective tax rate due to non-tax deductible merger expenses.
 
    The components of the net deferred tax asset are as follows:

                         
            December 31,
    September 30,            
    2004
   2003
 2002
    (Unaudited)                
Deferred tax asset:
                        
Federal
   $ 534     $ 504     $ 467  
State
     184       174       161  
 
    
 		      
 		      
 		  
 
     718       678       628  
 
    
 		      
 		      
 		  
Deferred tax liability:
                        
Federal
     (277 )     (247 )     (289 )
State
     (93 )     (79 )     (82 )
 
    
 		      
 		      
 		  
 
     (370 )     (326 )     (371 )
 
    
 		      
 		      
 		  
Net deferred tax asset
   $ 348     $ 352     $ 257  
 
    
 		      
 		      
 		  

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Table of Contents

CHART BANK, A COOPERATIVE BANK AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in Thousands)

    INCOME TAXES (concluded)
 
    The tax effects of each type of income and expense item that gives rise to deferred taxes are as follows:

                         
            December 31,
    September 30,        
    2004
   2003
   2002
    (Unaudited)                
Cash basis of accounting
   $ (4 )   $ (3 )   $ (4 )
Net unrealized gain on securities available for sale
     (19 )     (45 )     (146 )
Depreciation and amortization
     (62 )     (32 )     (9 )
Deferred income
     (78 )     (43 )     (13 )
Allowance for loan losses
     511       474       430  
Other
     —       1       (1 )
 
    
 		      
 		      
 		  
Net deferred tax asset
   $ 348     $ 352     $ 257  
 
    
 		      
 		      
 		  

    A summary of the change in the net deferred tax asset is as follows:

                                 
    Nine Months Ended   Years Ended
    September 30,
   December 31,
    2004
   2003
   2003
   2002
    (Unaudited)                
Balance at beginning of period
   $ 352     $ 257     $ 257     $ 120  
Deferred tax (provision) benefit
     (30 )     (5 )     (6 )     49  
Change in deferred tax effect of net unrealized gain/loss on securities available for sale
     26       83       101       88  
 
    
 		      
 		      
 		      
 		  
Balance at end of period
   $ 348     $ 335     $ 352     $ 257  
 
    
 		      
 		      
 		      
 		  

    There was no valuation reserve required during the nine months ended September 30, 2004 and 2003 (unaudited) and years ended December 31, 2003 and 2002.

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Table of Contents

CHART BANK, A COOPERATIVE BANK AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in Thousands)

8.   EMPLOYEE BENEFIT PLAN
 
    The Bank has a 401(k) Plan whereby each employee reaching the age of 21 and having completed six months of service automatically becomes a participant in the Plan. Employees may contribute up to 15% of their compensation subject to certain limits based on federal tax laws. The Bank may make discretionary matching contributions each Plan year proportionate to the employee’s contribution up to 4% of the employee’s compensation. The Bank’s contributions vest 20% per year of service and are fully vested after five years. For the nine months ended September 30, 2004 and 2003 (unaudited) and years ended December 31, 2003 and 2002, expense attributable to the Plan amounted to $61, $58, $78 and $90, respectively.
 
9.   MINIMUM REGULATORY CAPITAL REQUIREMENTS
 
    The Bank is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Bank’s consolidated financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank’s assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices. The Bank’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.
 
    Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios of total and Tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier 1 capital (as defined) to average assets (as defined). Management believes, as of September 30, 2004 (unaudited), December 31, 2003 and 2002, that the Bank met all capital adequacy requirements to which it is subject.

G-22

Table of Contents

CHART BANK, A COOPERATIVE BANK AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in Thousands)

    MINIMUM REGULATORY CAPITAL REQUIREMENTS (concluded)
 
    As of September 30, 2004 (unaudited) and December 31, 2003, the most recent notification from the Federal Deposit Insurance Corporation categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, the Bank must maintain minimum total risk-based, Tier 1 risk-based and Tier 1 leverage ratios as set forth in the following table. There are no conditions or events since the notification that management believes have changed the Bank’s category. The Bank’s actual capital amounts and ratios as of September 30, 2004 (unaudited), December 31, 2003 and 2002 are also presented in the table.

                                                 
                                    Minimum
                                    To Be Well
                    Minimum   Capitalized Under
                    Capital   Prompt Corrective
    Actual
   Requirements
   Action Provisions
    Amount
   Ratio
   Amount
   Ratio
   Amount
   Ratio
September 30, 2004 (unaudited)
                                                
Total capital
(to risk weighted assets)
   $ 19,281       12.0 %   $ 12,904       8.0 %   $ 16,130       10.0 %
Tier 1 capital
(to risk weighted assets)
     17,519       10.9       6,452       4.0       9,678       6.0  
Tier 1 capital
(to average assets)
     17,519       6.8       10,377       4.0       12,971       5.0  
December 31, 2003
                                                
Total capital
(to risk weighted assets)
   $ 18,989       12.4 %   $ 12,274       8.0 %   $ 15,343       10.0 %
Tier 1 capital
(to risk weighted assets)
     17,332       11.3       6,137       4.0       9,206       6.0  
Tier 1 capital
(to average assets)
     17,332       8.4       8,279       4.0       10,349       5.0  
December 31, 2002
                                                
Total capital
(to risk weighted assets)
   $ 17,379       11.9 %   $ 11,737       8.0 %   $ 14,672       10.0 %
Tier 1 capital
(to risk weighted assets)
     15,843       10.8       5,869       4.0       8,803       6.0  
Tier 1 capital
(to average assets)
     15,843       7.9       8,007       4.0       10,009       5.0  

G-23

Table of Contents

CHART BANK, A COOPERATIVE BANK AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in Thousands)

10.   STOCK OPTION PLAN
 
    During 1996 and amended in 2000, the Bank adopted a stock option plan for the benefit of employees of the Bank covering 142,000 shares of common stock, all of which were granted by the end of 2000. At September 30, 2004 (unaudited), December 31, 2003, 2002 and 2001, there were 137,000 options outstanding. The exercise period for all options is ten years and the exercise price is $10 per share, adjusted for stock splits and dividends in stock. The options vest over periods up to five years from the date of grant. At September 30, 2004 (unaudited), December 31, 2003 and 2002, 126,200, 120,200 and 106,800 options, respectively, were exercisable. At September 30, 2004 (unaudited) and December 31, 2003, the weighted average remaining contractual life of outstanding options was 3.8 and 4.6 years, respectively.
 
11.   COMMITMENTS AND CONTINGENCIES
 
    General
 
    In the ordinary course of business, various legal claims arise from time to time and, in the opinion of management, these claims will have no material effect on the Bank’s consolidated financial statements.
 
    Employment and consulting agreements
 
    The Bank has entered into an employment and consulting agreement with the former Chief Executive Officer of the Bank and an employment agreement with the current Chief Executive Officer for periods of not less than three years. The agreements generally provide for a specified minimum annual salary, which may be increased at the discretion of the Bank’s Board of Directors, and continuation of benefits currently received. The agreements provide for certain lump sum severance payments within a one-year period following a “change in control,” as defined in the agreements. (See Note 13.)
 
    Loan commitments
 
    The Bank is a party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and advance funds on home equity and commercial lines-of-credit. Those instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the consolidated balance sheets. The Bank’s exposure to credit loss is represented by the contractual amount or unpaid principal balance of those instruments. The Bank uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments.

G-24

Table of Contents

CHART BANK, A COOPERATIVE BANK AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in Thousands)

    COMMITMENTS AND CONTINGENCIES (continued)
 
    Loan commitments (concluded)
 
    The contract amount of financial instruments which represent credit risk are as follows:

                         
    September 30,   December 31,
    2004
   2003
   2002
    (Unaudited)                
Commitments to grant loans
   $ 8,623     $ 12,176     $ 1,134  
Unadvanced funds on home equity lines-of-credit
     6,637       4,988       4,637  
Unadvanced funds on commercial lines-of-credit
     11,803       7,714       6,428  
Unadvanced funds on construction loans
     4,601       2,749       2,411  

    Commitments to grant loans are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. The commitments for home equity and commercial lines-of-credit may expire without being drawn upon, therefore, the total commitment amounts do not necessarily represent future cash requirements. The Bank evaluates each customer’s credit worthiness on a case-by-case basis and these financial instruments are generally collateralized by real estate or other assets.
 
    Lease commitments
 
    Pursuant to the terms of lease agreements in effect at the dates noted, pertaining to banking premises, future minimum rent commitments are as follows:

                 
Year Ending   September 30,   December 31,
December 31,
  2004
   2003
    (Unaudited)        
2004
   $ 75     $ 319  
2005
     150       233  
2006
     138       138  
2007
     138       138  
2008
     34       34  
 
    
 		      
 		  
 
   $ 535     $ 862  
 
    
 		      
 		  

G-25

Table of Contents

CHART BANK, A COOPERATIVE BANK AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in Thousands)

    COMMITMENTS AND CONTINGENCIES (concluded)
 
    Lease commitments (concluded)
 
    In addition to the minimum rental payments, the leases contain renewal options for up to forty years. The cost of such options is not included above. Rent expense for the nine months ended September 30, 2004 (unaudited) and 2003 and years ended December 31, 2003 and 2002 amounted to $240, $240, $320 and $323, respectively.
 
    The Bank leases an office from a director of the Bank. At September 30, 2004 (unaudited) and December 31, 2003, future minimum rent commitments, included in the table above, total $481 and $584, respectively, through 2008. The lease contains renewal options for four additional ten year periods. Rent expense under this lease for the nine months ended September 30, 2004 and 2003 (unaudited) and years ended December 31, 2003 and 2002 amounted to $103, $103, $139 and $139, respectively.
 
12.   FAIR VALUE OF FINANCIAL INSTRUMENTS
 
    The fair value of a financial instrument is the current amount that would be exchanged between willing parties, other than in a forced liquidation. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for the Bank’s various financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument. Certain financial instruments and all nonfinancial instruments are excluded from disclosure requirements. Accordingly, the aggregate fair value amounts presented may not necessarily represent the underlying fair value of the Bank.
 
    The following methods and assumptions were used by the Bank in estimating fair value disclosures for financial instruments:

    Cash and cash equivalents: The carrying amounts of cash, due from banks and short-term investments approximate fair values.
 
    Securities: Fair values are based on quoted market prices.
 
    FHLB stock: The carrying value of FHLB stock approximates fair value based on the redemption provisions of the Federal Home Loan Bank of Boston.

G-26

Table of Contents

CHART BANK, A COOPERATIVE BANK AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in Thousands)

    FAIR VALUE OF FINANCIAL INSTRUMENTS (concluded)

    Loans: For variable rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values. Fair values for other loans are estimated using discounted cash flow analyses, using interest rates currently being offered for loans with similar terms, adjusted for credit risk.
 
    Accrued interest: The carrying amounts of accrued interest approximate fair values.
 
    Deposits: The fair values for non-certificate accounts are, by definition, equal to the amount payable on demand at the reporting date which is the carrying amount. Fair values for certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on time deposits.
 
    FHLB advances: The fair value of FHLB advances is estimated using discounted cash flow analyses based on the Bank’s current incremental borrowing rates for similar types of borrowing arrangements.
 
    Off-balance-sheet instruments: Fair values for off-balance-sheet lending commitments are based on fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties’ credit standing. The estimated fair values of off-balance-sheet instruments are immaterial.

    The estimated fair values, and related carrying amounts, of the Bank’s financial instruments are as follows:

                                                 
    September 30,   December 31,
    2004
   2003
   2002
    Carrying   Fair   Carrying   Fair   Carrying   Fair
    Amount
   Value
   Amount
   Value
   Amount
   Value
    (Unaudited)                                
Financial assets:
                                                
Cash and cash equivalents
   $ 38,773     $ 38,773     $ 34,874     $ 34,874     $ 44,753     $ 44,753  
Securities available for sale
     3,669       3,669       5,404       5,404       16,506       16,506  
Securities held to maturity
     31,826       31,742       23,965       23,960       13,026       13,172  
FHLB stock
     1,662       1,662       1,060       1,060       1,060       1,060  
Loans, net
     175,572       175,749       139,890       144,079       122,965       130,729  
Accrued interest receivable
     966       966       816       816       779       779  
Financial liabilities:
                                                
Deposits
     215,972       215,717       175,801       176,409       170,279       171,045  
FHLB advances
     22,000       21,938       15,930       15,941       14,986       15,162  

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CHART BANK, A COOPERATIVE BANK AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in Thousands)

13.   MERGER AGREEMENT
 
    On September 1, 2004, the Bank signed an Agreement and Plan of Merger with Benjamin Franklin Bancorp, MHC (Benjamin Franklin Bancorp), a Massachusetts-chartered mutual holding company, and Benjamin Franklin Savings Bank (Benjamin Franklin Bank), a Massachusetts-chartered savings bank and wholly-owned subsidiary of Benjamin Franklin Bancorp. Benjamin Franklin Bancorp and Benjamin Franklin Bank are located in Franklin, Massachusetts. Benjamin Franklin Bancorp will convert from mutual to stock form pursuant to a plan of conversion. The Bank will merge with Benjamin Franklin Bank, with Benjamin Franklin Bank as the surviving bank.
 
    Each share of the Bank’s common stock issued and outstanding immediately prior to the merger shall be converted into, and shall be cancelled in exchange for, the right to receive 3.075 shares of Benjamin Franklin Bancorp common stock or a cash amount equal to $30.75 per share of the Bank’s common stock. The per share stock consideration assumes a $10 per share price for Benjamin Franklin Bancorp’s common stock to be sold in the mutual-to-stock conversion.
 
    In addition, each option to purchase Chart Bank stock outstanding at the effective date of the merger, whether or not vested, shall be terminated and each grantee thereof shall be entitled to receive an amount of cash equal to the excess of the $30.75 per share cash consideration over the option exercise price.
 
    The Bank’s employment agreements with the former and current Chief Executive Officer will terminate upon completion of the merger.
 
    The merger is subject to regulatory approval and satisfaction of certain closing conditions.
 
    Merger expenses incurred through September 30, 2004 (unaudited) amounted to $382.
 
14.   SEGMENT REPORTING
 
    The Bank has two reportable segments, its traditional banking business and the operations of CSSI (see Note 1).

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CHART BANK, A COOPERATIVE BANK AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Dollars in Thousands)

    SEGMENT REPORTING (continued)
 
    Information about reportable segments, and reconciliation of such information to the consolidated financial statements at or for the periods ended follows:

                                 
                    Intersegment   Consolidated
    Bank
   CSSI
   Elimination
   Totals
September 30, 2004 (unaudited)
                                
Net interest income (loss)
   $ 5,274     $ (351 )   $ 351     $ 5,274  
Other revenue - external customers
     548       1,368       —       1,916  
Depreciation and amortization
     307       —       —       307  
Provision for loan losses
     90       —       —       90  
Income tax provision
     422       258       —       680  
Profit (loss)
     412       372       —       784  
Assets
     261,334       38,835       (43,908 )     256,261  
Expenditures for additions to premises and equipment
     78       —       —       78  
September 30, 2003 (unaudited)
                                
Net interest income
   $ 4,973     $ (334 )   $ 334     $ 4,973  
Other revenue - external customers
     704       1,344       —       2,048  
Depreciation and amortization
     320       —       —       320  
Provision for loan losses
     90       —       —       90  
Income tax provision
     551       272       —       823  
Profit (loss)
     911       391       —       1,302  
Assets
     207,569       31,313       (35,178 )     203,704  
Expenditures for additions to premises and equipment
     197       —       —       197  
December 31, 2003
                                
Net interest income
   $ 6,639     $ (433 )   $ 433     $ 6,639  
Other revenue - external customers
     910       1,755       —       2,665  
Depreciation and amortization
     429       —       —       429  
Provision for loan losses
     120       —       —       120  
Income tax provision
     718       358       —       1,076  
Profit (loss)
     1,187       515       —       1,702  
Assets
     214,124       33,112       (37,382 )     209,854  
Expenditures for additions to premises and equipment
     235       —       —       235  
December 31, 2002
                                
Net interest income
   $ 6,567     $ (515 )   $ 515     $ 6,567  
Other revenue - external customers
     1,833       1,437       —       3,270  
Depreciation and amortization
     434       —       —       434  
Provision for loan losses
     120       —       —       120  
Income tax provision
     778       180       —       958  
Profit (loss)
     1,310       259       —       1,569  
Assets
     206,117       30,770       (33,955 )     202,932  
Expenditures for additions to premises and equipment
     405       —       —       405  

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CHART BANK, A COOPERATIVE BANK AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Concluded)

(Dollars in Thousands)

    SEGMENT REPORTING (concluded)
 
    The accounting policies of the segments are the same as those described in the summary of significant accounting policies. The Bank evaluates performance based on net income.
 
    The Bank’s reportable segments are strategic business units that offer different products and services. They are managed separately because each segment appeals to different markets and, accordingly, requires different technology and marketing strategies.
 
    The Bank derives a majority of its revenues from interest income and the chief operating decision maker relies primarily on net interest revenue to assess the performance of the segments and make decisions about resources to be allocated to the segment. Therefore, the segments are reported using net interest income. Other revenue represents noninterest income.
 
    The Bank does not have operating segments other than those reported and does not have a single external customer from which it derives 10 percent or more of its revenues and operates in one geographical area.

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You should rely only on information contained in this prospectus. We have not authorized anyone to provide you with different information. This prospectus is not an offer to sell nor is it seeking an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. The information contained in this prospectus is correct only as of the date of this prospectus, regardless of the time of the delivery of this prospectus or any sale of these securities.

Up to 6,612,500
Shares of
Common Stock

BENJAMIN FRANKLIN BANCORP, INC.

(Holding Company for Benjamin Franklin Bank)

PROSPECTUS

Ryan Beck & Co., Inc.

[_____________], 2005

Until the later of [   ] 2005 or 25 days after commencement of the syndicated community offering, if any, all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

 

PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution.

         
* Legal fees and expenses
   $ 675,000  
* Printing, postage and mailing
     75,000  
* Appraisal and business plan fees and expenses
     95,000  
* Accounting fees and expenses
     75,000  
* Conversion agent and data processing fees
     45,000  
** Marketing agent fees and expenses
     465,000  
* Filing fees (Massachusetts Commissioner of Banks, Massachusetts Secretary of State, NASD, Nasdaq and SEC)
     196,000  
* Other
     100,000  
 
    
 		  
*      Total
   $ 1,726,000  
 
    
 		  

*   Estimated
 
**   Benjamin Franklin Bancorp has retained Ryan Beck & Co., Inc. to assist in the sale of common stock on a best efforts basis in the offering. Fees are estimated at the midpoint of the offering range

Item 14. Indemnification of Directors and Officers.

     Sections 8.50-8.59 of the Massachusetts Business Corporation Act authorize a Massachusetts corporation to indemnify its present and former directors and officers under certain conditions. Article 7 of our by-laws provides that we shall indemnify each person who serves or has served as a director or officer at the level of Vice President or above to the fullest extent permitted by applicable law, against expenses (including attorney’s fees), judgments, fines, ERISA excise taxes, penalties, and amounts reasonably paid in settlement incurred in connection with any threatened, pending or completed action, suit, arbitration, alternate dispute resolution mechanism, inquiry, investigation, administrative hearing or any other proceeding whether civil, criminal, administrative, arbitrative or investigative (without regard to whether the basis of such proceeding is alleged action in an official capacity as a director or officer or in any other capacity for or on behalf of Benjamin Franklin Bancorp while serving as a director or officer) or any claim, issue or matter therein, which proceeding such director or officer is, or is threatened to be made, a party to or participant in by reason of the fact that he or she is or was one of our directors or officers or was serving at our request as a director, officer, trustee, or in a similar capacity with another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise. The rights of indemnification continue as to a director or officer after he or she has ceased to be a director or officer and shall inure to the benefit of his or her heirs, estate, executors, administrators and personal representatives. No amendment, termination or repeal of the provisions of Article 7 of our by-laws or of the relevant provisions of the Massachusetts Business Corporation Act shall affect or deprive a director or officer of the benefit of those by-laws or applicable law with respect to any proceeding arising out of or relating to any actions, transactions or facts occurring prior to such amendment, termination or repeal.

     Section 2.02 of the Massachusetts Business Corporation Act authorizes a Massachusetts corporation to adopt a charter provision eliminating or limiting the personal liability of directors to the corporation for monetary damages for breach of fiduciary duty as directors, provided that the provision may not eliminate or limit the liability of directors for:

•   any breach of the director’s duty of loyalty to the corporation or its stockholders;

•   any acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law;

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•   any improper distributions to stockholders under Section 6.40 of the Massachusetts Business Corporation Act; or

•   any transaction from which the director derived an improper personal benefit.

     Section 6.5.4 of Benjamin Franklin Bancorp’s articles of organization provides that, to the maximum extent permitted by the Massachusetts Business Corporation Act, none of our directors shall be personally liable to us or our stockholders for monetary damages for breach of fiduciary duty as a director notwithstanding any provision of law imposing such liability. No amendment to or repeal of the provisions of Section 6.5.4 shall apply to or have any effect on the liability or alleged liability of any director for or with respect to any act or failure to act of such director occurring prior to such amendment or repeal. If the Massachusetts Business Corporation Act is subsequently amended to further eliminate or limit the personal liability of directors or to authorize corporate action to further eliminate or limit such liability, then the liability of the directors will be eliminated or limited to the fullest extent permitted by the Massachusetts Business Corporation Act as so amended. A principal effect of Section 6.5.4 is to limit or eliminate the potential liability of our directors for monetary damages arising from breaches of their duty of care, unless the breach involves one of the four exceptions described above.

     Section 8.57 of the Massachusetts Business Corporation Act also authorizes a Massachusetts corporation to obtain insurance on behalf of its directors and officers against liability incurred by them in those capacities. We have procured a directors’ and officers’ liability and company reimbursement liability insurance policy that insures (a) our directors and officers against losses, above a deductible amount, arising from specified types of claims made against them by reason of enumerated acts done or attempted by our directors or officers and (b) us against losses, above a deductible amount, arising from any of the specified types of claims, but only if we are required or permitted to indemnify our directors or officers for those losses under statutory or common law or under provisions of our articles of organization or by-laws.

Item 15. Recent Sales of Unregistered Securities.

None.

Item 16. Exhibits and Financial Schedules.

     (a) Exhibits

     
Exhibit No.
   Description
1.1
  Engagement Letter between Benjamin Franklin Bancorp and Ryan Beck & Co.
 
    
1.2
  Form of Agency Agreement between Benjamin Franklin Bancorp and Ryan Beck & Co.*
 
    
2.1
  Plan of Conversion of Benjamin Franklin Bancorp
 
    
2.2
  Agreement and Plan of Merger among Benjamin Franklin Bancorp, M.H.C., Benjamin Franklin Savings Bank and Chart Bank, a Cooperative Bank, dated as of September 1, 2004.
 
    
3.1
  Articles of Organization of Benjamin Franklin Bancorp, Inc.
 
    
3.2
  Bylaws of Benjamin Franklin Bancorp, Inc.
 
    
4.1
  Form of Common Stock Certificate of Benjamin Franklin Bancorp, Inc.*
 
    
5.1
  Form of opinion of Foley Hoag LLP regarding legality of securities being registered.
 
    
8.1
  Form of Tax Opinion of Foley Hoag LLP.

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Exhibit No.
   Description
10.1.1
  Form of Employment Agreement with Thomas R. Venables.
 
    
10.1.2
  Form of Employment Agreement with Claire S. Bean.
 
    
10.1.3
  Form of Employment Agreement with Stephen F. Banks.
 
    
10.2
  Form of Change in Control Agreement with six other Executive Officers.
 
    
10.3
  Form of Benjamin Franklin Bank Benefit Restoration Plan.
 
    
10.4.1
  Benjamin Franklin Bank Salary Continuation Agreement with Thomas R. Venables dated as of August 22, 2002.
 
    
10.4.2
  Benjamin Franklin Bank Supplemental Executive Retirement Plan with Stephen F. Banks dated as of January 1, 2000.
 
    
10.5
  Benjamin Franklin Bancorp Director Fee Continuation Plan.
 
    
10.6
  Benjamin Franklin Bancorp Employee Salary Continuation Plan.
 
    
10.7.1
  Payments and Waiver Agreement among Richard E. Bolton, Jr., Benjamin Franklin Bancorp, M.H.C., Benjamin Franklin Savings Bank and Chart Bank, a Cooperative Bank, dated as of September 1, 2004.
 
    
10.7.2
  Consulting and Noncompetition Agreement between Richard E. Bolton, Jr. and Benjamin Franklin Bancorp, M.H.C., dated as of September 1, 2004.
 
    
10.8
  Special Termination Agreement between Alfred F. Odoardi and Chart Bank dated as of August 20, 2004.
 
    
21
  Subsidiaries of Registrant
 
    
23.1
  Consent of Foley Hoag LLP (contained in Opinion included as Exhibit 5)
 
    
23.2
  Consent of Foley Hoag LLP (contained in Opinion included as Exhibit 8.1)
 
    
23.3
  Consent of Wolf & Company, P.C. with respect to Benjamin Franklin Bancorp
 
    
23.4
  Consent of Wolf & Company, P.C. with respect to Chart Bank
 
    
23.5
  Consent of RP Financial, LC.
 
    
24
  Power of Attorney (set forth on signature page)
 
    
99.1
  Appraisal Agreement between Benjamin Franklin Bancorp and RP Financial, LC.
 
    
99.2
  Appraisal Report of RP Financial, LC. *
 
    
99.3
  Business Plan Agreement between Benjamin Franklin Bancorp and RP Financial, LC.
 
    
99.4
  Marketing Materials *
 
    
99.5
  Order and Acknowledgment Form *
 
    
99.7
  Prospectus Supplement for participants in the Benjamin Franklin Bank 401(k) *
 
    
99.8
  Consents of Richard E. Bolton, Jr., Paul E. Capasso, Jonathan A. Haynes, Daniel F. O’Brien, Donald P. Quinn, and Neil E. Todreas, to be identified as proposed directors

*   To be filed supplementally or by amendment.

     (b) Financial Statement Schedules

All schedules are omitted because they are not applicable or the required information is shown in our financial statements and related notes.

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Item 17. Undertakings.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission that indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against those liabilities (other than our payment of expenses incurred or paid by one of our directors, officers or controlling persons of the registrant in the successful defense of any action, suit or proceeding) is asserted by our directors, officers or controlling persons in connection with the securities being registered, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether that indemnification by us is against public policy as expressed in the Securities Act and we will be governed by the final adjudication of such issue.

     We hereby undertake:

(1) To file, during any period in which it offers or sales are being made, a post-effective amendment to this registration statement:

(i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;

(ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high and of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20.0% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement;

(iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.

(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

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SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, Benjamin Franklin Bancorp, M.H.C. has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Franklin, Commonwealth of Massachusetts, as of December 7, 2004.
         
  Benjamin Franklin Bancorp, M.H.C.
 		  
  By:   /s/ Thomas R. Venables    
    Thomas R. Venables   
    President and Chief Executive Officer   
 

POWER OF ATTORNEY

The undersigned officers and trustees of Benjamin Franklin Bancorp, M.H.C. hereby severally constitute and appoint Thomas R. Venables, Claire S. Bean and Carol Hempfling Pratt, and each of them singly, our true and lawful attorneys-in-fact with full power of substitution, to sign for us and in our names in the capacities indicated below, any and all pre- and post-effective amendments to this Registration Statement, any subsequent registration statement for the same offering filed pursuant to Rule 462(b) under the Securities Act of 1933 and any and all pre-and post-effective amendments thereto, and to file the same, with all exhibits thereto, and all documents in connection therewith, with the Securities and Exchange Commission, and generally to do all things in our names and on our behalf in our capacities as officers and trustees to enable Benjamin Franklin Bancorp, M.H.C. to comply with the provisions of the Securities Act of 1933 and all requirements of the Securities and Exchange Commission, hereby ratifying and confirming our signatures as they may be signed by our said attorneys-in-fact, or any of them, to said Registration Statement and any and all amendments thereto or to any subsequent Registration Statements for the same offering filed pursuant to said Rule 462(b) under the Securities Act of 1933.

In accordance with the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the in the indicated capacities as of December 7, 2004.

     
Signature
   Title
/s/ Thomas R. Venables
  President and Chief Executive Officer, Director
  (Principal Executive Officer)
Thomas R. Venables
    
 
    
/s/ Claire S. Bean
  Treasurer and Chief Financial Officer
  (Principal Financial and Accounting Officer)
Claire S. Bean
    
 
    
/s/ Mary Ambler
  Director
   
Mary Ambler
    
 
    
/s/ William P. Bissonnette
  Director
   
William P. Bissonnette
    

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Signature
   Title
/s/ William F. Brady, Jr.
  Director
   
William F. Brady, Jr. 
   
 
    
 
   Director
   
John C. Fuller
    
 
    
/s/ Anne M. King
  Director
   
Anne M. King
    
 
    
/s/ Richard D. Mann
  Director
   
Richard D. Mann 
   
 
    
 
   Director
   
John D. Murphy
    
 
    
/s/ Charles F. Oteri
  Director
   
Charles F. Oteri
    
 
    
/s/ Alfred H. Wahlers
  Director
   
Alfred H. Wahlers
    
 
    
/s/ Charles Yergatian
  Director
   
Charles Yergatian
    

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EX-1.1 2 b52576bfexv1w1.txt EX-1.1 ENGAGEMENT LETTER BETWEEN BENJAMIN FRANKLIN BANCORP AND RYAN BECK & CO. EXHIBIT 1.1 [Letterhead of Ryan, Beck & Co., Inc.] CONFIDENTIAL October 13, 2004 Mr. Thomas R. Venables President & Chief Executive Officer Benjamin Franklin Bancorp, MHC Benjamin Franklin Savings Bank 58 Main Street Franklin, MA 02038 Re: Mutual to Stock Conversion - Subscription Enhancement & Administrative Services Dear Mr. Venables: Ryan Beck & Co., Inc. ("RBCO") is pleased to submit this engagement letter setting forth the terms of the proposed engagement between RBCO and Benjamin Franklin Bancorp, MHC, (the "Company"), and Benjamin Franklin Savings Bank (the "Bank") in connection with the proposed conversion of the Company to stock form and concurrent sale of common stock. 1. BACKGROUND ON RYAN BECK Ryan Beck & Co., Inc. was organized in 1946 and is one of the nation's leading investment bankers for financial institutions. The firm is a registered broker-dealer with the Securities and Exchange Commission, a member of the National Association of Securities Dealers, Inc., Securities Industry Association and a member of the Securities Investor Protection Corporation. RBCO's Financial Institutions Group represents one of the largest such groups devoted solely to financial institution matters in the country. 2. MUTUAL TO STOCK CONVERSION AND STOCK OFFERING It is our understanding that the Company has signed a definitive agreement to acquire Chart Bank, A Cooperative Bank ("Chart") (the "Merger") contingent upon the Company's proposed conversion (the "Conversion") to a fully converted public company. (The Company in its pre-Conversion mutual form and post-Conversion stock form is referred to herein as the "Company"). In connection therewith, the Company's common stock (the "Common Stock") would be offered in a subscription offering with any remaining shares sold in a direct community offering and, if necessary, a syndicated community offering (collectively the "Offering"). If there are unsubscribed for shares after the depositor offering and the direct community offering, the Company may, in its discretion, determine to apply unsubscribed shares toward the stock portion of the merger consideration to be paid to Chart Bank's stockholders ("Adjusted Minimum Feature"). In connection with the Conversion and Offering, the Company's Board of Trustees would adopt a Plan of Conversion from Mutual to Stock Mr. Thomas R. Venables Benjamin Franklin Bancorp, MHC Page 2 Form (the "Plan") whereby shares of Common Stock would be offered for sale in the Offering. In connection with the Offering, RBCO would propose to act as financial advisor to the Company with respect to the Plan and selling agent/manager with respect to the Offering of the shares of Common Stock in the Offering. Specific terms of services shall be set forth in a definitive agency agreement (the "Definitive Agreement") between RBCO and the Company to be executed on the date the offering document is declared effective by the appropriate regulatory authorities. As previously disclosed to the Company, Ryan Beck is engaged to represent Chart as its financial advisor in the Merger. Under certain circumstances, pursuant to section 7.9 of the Agreement and Plan of Merger dated September 1, 2004 by and between the Company and Chart, Chart may be required to address any unsolicited bona fide written acquisition proposal(s) from a party(s) other than the Company. In such circumstances, Ryan Beck agrees not to counsel Chart or opine on the financial merits of any such competing offer. Chart would seek professional financial advice from a second independent financial advisor. 3. SERVICES TO BE PROVIDED BY RYAN BECK a. Advisory Services - Thorough planning is essential to a successful offering. RBCO serves as lead coordinator of the financial advisory, marketing and logistic efforts necessary to prepare for an offering. Our actions are intended to clearly define responsibilities and timetables, while avoiding costly surprises. We assume responsibility for the initial preparation of marketing materials--saving you time and legal expense. Moreover, as your investment banker, RBCO, will evaluate the financial, marketing and regulatory issues involved in the Offering. Our specific responsibilities include: - Advise with respect to business planning issues in preparation for a public offering; - Advise with respect to the choice of charter and form of organization; - Review and advise with respect to the Plan; - Review and provide input with respect to the Business Plan to be prepared in connection with the Offering; - Participate in drafting the Prospectus and assist in obtaining all requisite regulatory approvals; - Review and provide comments to the Board of Trustees on the adequacy of the appraisal process; - Develop a marketing plan for the Offering including direct mail, advertising, community meetings and telephone solicitation; - Provide specifications and assistance in selecting data processing assistance, printer and other professionals; - Develop an operating plan for the Stock Sale Center (the "Center"); - Provide a list of equipment and supplies needed for the Center; - Draft marketing materials including letters, brochures, slide show script and advertisements; and - Assist in arranging market-makers for post-reorganization trading. Mr. Thomas R. Venables Benjamin Franklin Bancorp, MHC Page 3 b. Administrative Services and Stock Sale Center Management - RBCO will manage all aspects of the Offering. A successful Offering requires an enormous amount of attention to detail. Working knowledge and familiarity with the law and "lore" of bank regulators, Securities and Exchange Commission and NASD is essential. RBCO's experience in managing many thrift reorganizations and mutual holding company conversion offerings will minimize the burden on your management and disruption to normal banking business. At the same time, our legal, accounting and regulatory background ensures that details are attended to in a professional fashion. An Offering requires accurate and timely record keeping and reporting. Furthermore, customer inquiries must be handled professionally and accurately. The Stock Sale Center centralizes all data and work effort relating to the Offering. RBCO will supervise and administer the Center. We will train Center staff to help record stock orders, answer customer inquiries and handle special situations as they arise. Center activities include the following: - Provide experienced on-site registered representatives to minimize disruption of day-to-day business; - Identify and organize space for the Center, the focal point of sales activity; - Administer the Center. All substantive stock related matters will be handled by employees of RBCO; - Prepare procedures for processing stock orders and cash, and for handling requests for information; - RBCO will outsource all Offering agent/data processing/transfer agent functions. The cost of such services will be borne by the Company and are subject to separate agreement. RBCO will provide the Company with the proposed agreements for such services prior to the execution of such agreements by RBCO or the Companies; - Provide scripts, training and guidance for the telephone team in the stock sales telemarketing effort; - Educate the Company's directors, officers and employees about the Conversion and Offering, their roles and relevant securities laws; - Train branch managers and customer-contact employees on the proper response to stock purchase inquiries; - Train and supervise Center staff assisting with order processing; - Prepare daily sales reports for management and ensure funds received balance to such reports; - Coordinate functions with the data processing agent, printer, transfer agent, stock certificate printer and other professionals; - Design and implement procedures for handling IRA and Keogh orders; and - Provide post-offering subscriber assistance and management of the pro-ration process. Mr. Thomas R. Venables Benjamin Franklin Bancorp, MHC Page 4 c. Securities Marketing Services - RBCO uses various sales techniques including direct mail, advertising, community investor meetings, telephone solicitation, and if necessary, selling group formation. The sales approach is tailored to fit your specific situation. Our techniques are designed to attract a stockholder base comprised largely of community oriented individuals loyal to the Company. Our specific actions include: - Assign licensed registered representatives from our staff to work at the Center to solicit orders on behalf of the Company from eligible prospects who have been targeted as likely and desirable stockholders; - Assist management in developing a list of potential investors who are viewed as priority prospects; - Respond to inquiries concerning the Offering and investment opportunities; - Organize, coordinate and participate in community informational meetings. These meetings are intended to both relieve customer anxiety and attract potential investors. The meetings generate widespread publicity for the Offering while providing local exposure of the Company and promoting favorable stockholder relations; - Supervise and conduct a telemarketing campaign to identify prospects from among the Company's customer base; - Continually advise management on market conditions and the community's responsiveness to the Offering; and - If appropriate assemble a selling group of selected local broker-dealers to assist in selling stock during the offering. In so doing, prepare broker "fact sheets" and arrange "road shows" for the purpose of stimulating local interest in the stock and informing the brokerage community of the particulars of the Offering. 4. COMPENSATION a. A fee of one percent (1.00%) of the dollar amount of the Common Stock sold in the Offering. No fee shall be payable pursuant to this subsection in connection with the sale of stock to (i) officers, Directors, employees or immediate family of such persons ("Insiders"); (ii) a charitable foundation associated with the Company; or (iii) qualified and non-qualified employee benefit plans of the Company or the Insiders. Also, no fee shall be payable on shares issued in connection with the acquisition of Chart, including shares issued as Adjusted Minimum shares. b. For stock sold by a group of NASD member firms (which will include RBCO) pursuant to a syndicated community offering solely managed by RBCO (the "Selling Group"), a fee equal to one percent (1.00%), which fee along with the fee payable directly by the Company to selected dealers shall not exceed six percent (6.00%) in the aggregate. In consultation with RBCO, the Company shall be authorized to determine which NASD member firms participate in the syndicated Mr. Thomas R. Venables Benjamin Franklin Bancorp, MHC Page 5 community offering and the extent of their participation. RBCO will not commence sales of the stock through members of the Selling Group without the specific prior approval of the Company. Unless otherwise stated all fees described in subparagraphs a and b above are to be paid to RBCO at the closing of the Conversion. If, pursuant to a resolicitation undertaken by the Company, RBCO is required to provide significant additional services, the parties shall mutually agree to the dollar amount of the additional compensation due (if any). c. The term of this engagement shall be for a period of one year, unless RBCO's services are terminated earlier by the Company or RBCO at any time with or without cause effective upon receipt of written notice to that effect. d. If, after adoption of the Plan, (i) the Plan is abandoned or terminated by the Company; (ii) the Offering is not consummated by September 30, 2005; (iii) RBCO terminates this relationship because there has been a material adverse change in the financial condition or operations of the Company since June 30, 2004; or (iv) immediately prior to commencement of the Offering, RBCO terminates this relationship because in its opinion, which shall have been formed in good faith after reasonable determination and consideration of all relevant factors, there has been a failure to satisfactorily disclose all relevant information in the disclosure documents or the existence of market conditions which might render the sale of the shares by the Company hereby contemplated inadvisable; RBCO shall not be entitled to the fees set forth above under subparagraphs a and b, but shall be entitled to receive the reimbursement of its reasonable out-of-pocket expenses as set forth in paragraph 7 below. 5. MARKET MAKING RBCO agrees to use its best efforts to maintain a market and to solicit other broker-dealers to make a market in the Common Stock after the Offering so that there are at least three market makers for the Common Stock after the Offering. 6. DOCUMENTS The Company and its counsel will complete, file with the appropriate regulatory authorities and, as appropriate, amend from time to time, the information to be contained in the Company's applications to banking and securities regulators and any related exhibits thereto. In this regard, the Company and its counsel will prepare a prospectus and any other necessary disclosure documents relating to the offering of the Common Stock in conformance with applicable rules and regulations. As the Company's financial advisor, RBCO will in conjunction with counsel, conduct an examination of the relevant documents and records of the Company and the Bank and will make such other reasonable investigation as deemed necessary and appropriate under the circumstances. The Company and the Bank agree to make all such documents, records and other information deemed necessary by RBCO, or its counsel, available to them upon reasonable request. RBCO's counsel will prepare, subject to the approval of the Company's counsel, the Definitive Agreement. RBCO's counsel shall be selected by RBCO, subject to the approval of the Company. Mr. Thomas R. Venables Benjamin Franklin Bancorp, MHC Page 6 7. EXPENSES AND REIMBURSEMENT The Company and the Bank will bear all of its expenses in connection with the Conversion and the Offering of the Common Stock including, but not limited to, the Company's attorney fees, NASD filing fees, "blue sky" legal fees, expenses for appraisal, auditing and accounting services, advertising expenses, printing expenses, "road show" expenses, syndicate related expenses, temporary personnel expenses and the preparation of stock certificates. In the event RBCO incurs such expenses on behalf of the Company or the Bank, the Company shall pay or reimburse RBCO for such reasonable fees and expenses regardless of whether the Conversion is successfully completed. RBCO will not incur any single expense of more than $2,000, pursuant to this paragraph without the prior approval of the Company. The Company also agrees to reimburse RBCO for reasonable out-of-pocket expenses, including legal fees and expenses, incurred by RBCO in connection with the services contemplated hereunder. RBCO will not incur legal fees (excluding the out-of-pocket expenses of counsel) in excess of $75,000 without the approval of the Company. RBCO will not incur reimbursable direct out of pocket expenses in excess of $25,000 without the consent of the Company. The parties acknowledge, however, that such cap may be increased by the mutual consent of the Company and RBCO in the event of any material delay in the Offering which would require an update of the financial information in tabular form contained in the prospectus for a period later than that set forth in the original Prospectus filing. Not later than three days before closing, we will provide you with a detailed accounting of all reimbursable expenses to be paid at closing. 8. BLUE SKY To the extent required by applicable state law, RBCO and the Company will need to obtain or confirm exemptions, qualifications or registration of the Common Stock under applicable state securities laws and NASD policies. The cost of such legal work and related filing fees will be paid by the Company to the law firm furnishing such legal work. The Company will cause the counsel performing such services to prepare a Blue Sky memorandum related to the Offering including RBCO's participation therein and shall furnish RBCO a copy thereof addressed to RBCO or upon which such counsel shall state RBCO may rely. 9. AVAILABILITY OF "STARS" PROGRAM As an additional service to the Company, RBCO will make available for a period of 1 year following the completion of the Offering, advisory services through the RBCO Strategic Advisory Services ("STARS") program. Fred Schluter will serve as the senior relationship manager for this program. If the Company elects to avail itself of the STARS program, RBCO will meet with the Company at its request. RBCO also will provide opinions and recommendations, upon request, for the areas covered below: Valuation Analysis Merger and Acquisition Planning and Analysis Mr. Thomas R. Venables Benjamin Franklin Bancorp, MHC Page 7 Merger and Acquisition Trends Planning, Forecasting & Competitive Strategy Capital, Asset & Liability Structure & Management Stock Repurchase Programs Dividend Policy Dividend Reinvestment Programs Market Development and Sponsorship of Bank Securities Financial Disclosure Financial Relations Financial Reports Branch Sales and Purchases Stock Benefit Plan Analysis and Advisory Stockholder & Investor Relations Presentations & Programs Fairness Opinions Scanning of Potential Acquisition Candidates Based on Published Statement Information (This screening does not extend to any in-depth merger and acquisition analyses or studies which are available under RBCO's normal fee schedule, and does not include retention of RBCO by the Company for any specific merger/acquisition situation.) If the Company elects to utilize the STARS program RBCO will waive the regular retainer fee and hourly charges for this program for the first year. The Company also will reimburse RBCO's reasonable out-of-pocket expenses incurred in conjunction with the performance of these services. Such out-of-pocket expenses shall include travel, legal and other miscellaneous expenses. RBCO will not incur any single expense in excess of $2,000 pursuant to this paragraph without the prior approval of the Company. 10. INDEMNIFICATION The Definitive Agreement will provide for indemnification of the type usually found in underwriting agreements as to certain liabilities, including liabilities under the Securities Act of 1933. The Company and the Bank also agree to defend, indemnify and hold harmless RBCO and its officers, directors, employees and agents against all claims, losses, actions, judgments, damages or expenses, including but not limited to reasonable attorneys' fees, arising solely out of the engagement described herein, except that such indemnification shall not apply to RBCO's own bad faith, willful misconduct or gross negligence. 11. CONFIDENTIALITY To the extent consistent with legal requirements and except as otherwise set forth in the Prospectus, all information given to RBCO by the Company or the Bank or Chart Bank, unless publicly available or otherwise available to RBCO without restriction to breach of any confidentiality agreement ("Confidential Information"), will be held by RBCO in confidence and will not be disclosed to anyone other than RBCO's agents without the Company's or Chart Bank's, as applicable, prior approval or Mr. Thomas R. Venables Benjamin Franklin Bancorp, MHC Page 8 used for any purpose other than those referred to in this engagement letter. Upon any termination of its engagement, RBCO shall promptly deliver to the Company or Chart Bank, as applicable, all materials specifically produced for it and will return to the Company and Chart Bank, as applicable, all Confidential Information provided to RBCO during the course of its engagement hereunder. 12. NASD MATTERS RBCO has an obligation to file certain documents and to make certain representations to the National Association of Security Dealers ("NASD") in connection with the Offering. The Company and the Bank agree to cooperate with RBCO and provide such information as may be necessary for RBCO to comply with all NASD requirements applicable to it in connection with its participation as contemplated herein in the Offering. RBCO is and will remain through completion of the Offering a member in a good standing of the NASD and will comply with all applicable NASD requirements. 13. OBLIGATIONS (a) Except as set forth below, this engagement letter is merely a statement of intent. While RBCO, the Company and the Bank agree in principle to the contents hereof and propose to proceed promptly and in good faith to work out the arrangements with respect to the Offering, any legal obligations between RBCO, the Company and the Bank shall be only: (i) those set forth herein in paragraphs 2, 3 and 4 regarding services and payments; (ii) those set forth in paragraph 7 regarding reimbursement for certain expenses; (iii) those set forth in paragraph 10 regarding indemnification; (iv) those set forth in paragraph 11 regarding confidentiality; and (v) as set forth in a duly negotiated and executed Definitive Agreement. (b) The obligation of RBCO to enter into the Definitive Agreement shall be subject to there being, in RBCO's opinion, which shall have been formed in good faith after reasonable determination and consideration of all relevant factors: (i) no material adverse change in the condition or operation of the Company or the Bank; (ii) satisfactory disclosure of all relevant information in the disclosure documents and a determination that the sale of stock is reasonable given such disclosures; (iii) no market conditions which might render the sale of the shares by the Company hereby contemplated inadvisable; and (iv) agreement that the price established by the independent appraiser is reasonable in the then prevailing market conditions. 14. INDEPENDENT CONTRACTOR; NO FIDUCIARY DUTY The Company and the Bank acknowledge and agree that they are a sophisticated business enterprises and that RBCO has been retained pursuant to this Agreement to act as financial advisor to the Company and the Bank solely with respect to the matters set forth herein. In such capacity, RBCO shall act as an independent contractor, and any duties of RBCO arising out of this engagement pursuant to this Agreement shall be contractual in nature and shall be owed solely to the Company and the Bank. Each party disclaims any intention to impose any fiduciary duty on the other. Mr. Thomas R. Venables Benjamin Franklin Bancorp, MHC Page 9 15. GOVERNING LAW This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts applicable to contracts executed and to be wholly performed therein without giving effects to its conflicts of laws principles or rules. Any dispute here under shall be brought in a court in the Commonwealth of Massachusetts. 16. WAIVER OF TRAIL BY JURY EACH OF RBCO AND THE COMPANY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) RELATED TO OR ARISING OUT OF THIS AGREEMENT. RYAN BECK & CO., INC. BY: __________________________________ Robin P. Suskind Managing Director Accepted and Agreed to This _____ Day of October, 2004 BENJAMIN FRANKLIN BANCORP, MHC BY: _________________________________ Thomas R. Venables President & Chief Executive Officer BENJAMIN FRANKLIN SAVINGS BANK BY: ________________________________ Thomas R. Venables President & Chief Executive Officer EX-2.1 3 b52576bfexv2w1.txt EX-2.1 PLAN OF CONVERSION EXHIBIT 2.1 BENJAMIN FRANKLIN BANCORP, M.H.C. PLAN OF CONVERSION ADOPTED BY THE BOARD OF TRUSTEES ON OCTOBER 28, 2004 TABLE OF CONTENTS ARTICLE 1. INTRODUCTION - BUSINESS PURPOSE...................................... 1 ARTICLE 2. DEFINITIONS.......................................................... 3 2.1. ACTING IN CONCERT....................................................... 3 2.2. AFFILIATE............................................................... 3 2.3. APPLICATION............................................................. 3 2.4. ASSOCIATE............................................................... 3 2.5. BANK.................................................................... 4 2.6. BHCA.................................................................... 4 2.7. COMMISSIONER............................................................ 4 2.8. COMMUNITY OFFERING...................................................... 4 2.9. CONVERSION.............................................................. 4 2.10. CORPORATOR............................................................. 4 2.11. DEPOSIT ACCOUNT........................................................ 4 2.12. DIRECT COMMUNITY OFFERING.............................................. 4 2.13. DIVISION............................................................... 4 2.14. ELIGIBLE ACCOUNT HOLDER................................................ 5 2.15. ELIGIBILITY RECORD DATE................................................ 5 2.16. EMPLOYEE............................................................... 5 2.17. EMPLOYEE PLAN.......................................................... 5 2.18. ESOP................................................................... 5 2.19. ESTIMATED VALUATION RANGE.............................................. 5 2.20. EXCHANGE ACT........................................................... 5 2.21. FDIC................................................................... 5 2.22. FRB.................................................................... 5 2.23. FRB APPLICATION........................................................ 5 2.24. FOUNDATION............................................................. 5 2.25. GROUP MAXIMUM PURCHASE LIMIT........................................... 5 2.26. HOLDING COMPANY COMMON STOCK........................................... 5 2.27. HOLDING COMPANY CONVERSION STOCK....................................... 5 2.28. INDEPENDENT APPRAISER.................................................. 5 2.29. INDEPENDENT CORPORATOR................................................. 5 2.30. INDEPENDENT VALUATION.................................................. 6 2.31. INDIVIDUAL MAXIMUM PURCHASE LIMIT...................................... 6 2.32. INFORMATION STATEMENT.................................................. 6 2.33. LIQUIDATION ACCOUNT.................................................... 6 2.34. LOCAL COMMUNITY........................................................ 6 2.35. MARKETING AGENT........................................................ 6 2.36. MARKET MAKER........................................................... 6 2.37. MERGER SHARES.......................................................... 6 2.38. MHC.................................................................... 6 2.39. NON-TAX-QUALIFIED EMPLOYEE BENEFIT PLAN................................ 6 2.40. OFFERING............................................................... 6 2.41. OFFICER................................................................ 6
- i - 2.42. PERSON................................................................. 6 2.43. PLAN................................................................... 6 2.44. QUALIFYING DEPOSIT..................................................... 7 2.45. RANGE MAXIMUM.......................................................... 7 2.46. RANGE MINIMUM.......................................................... 7 2.47. REGULATIONS............................................................ 7 2.48. SEC.................................................................... 7 2.49. SPECIAL MEETING........................................................ 7 2.50. STOCK HOLDING COMPANY.................................................. 7 2.51. SUBSCRIPTION OFFERING.................................................. 7 2.52. SUBSCRIPTION PRICE..................................................... 7 2.53. SUBSIDIARY............................................................. 7 2.54. SUPPLEMENTAL ELIGIBLE ACCOUNT HOLDER................................... 7 2.55. SUPPLEMENTAL ELIGIBILITY RECORD DATE................................... 7 2.56. SYNDICATED COMMUNITY OFFERING.......................................... 7 2.57. TAX-QUALIFIED EMPLOYEE PLAN............................................ 8 ARTICLE 3. GENERAL PROCEDURE FOR CONVERSION..................................... 8 3.1. PRECONDITIONS TO CONVERSION............................................. 8 3.2. SUBMISSION OF PLAN TO COMMISSIONER AND FRB.............................. 8 3.3. SPECIAL MEETING OF CORPORATORS TO APPROVE THE PLAN...................... 8 3.4. STOCK HOLDING COMPANY CHARTER AND BYLAWS................................ 9 3.5. BANK CHARTER AND BYLAWS................................................. 9 3.6. OFFER AND SALE OF HOLDING COMPANY CONVERSION STOCK...................... 9 3.7. CONVERSION OF MHC TO STOCK HOLDING COMPANY.............................. 9 ARTICLE 4. ESTABLISHMENT AND FUNDING OF CHARITABLE FOUNDATION................... 10 4.1. ESTABLISHMENT OF THE FOUNDATION......................................... 10 4.2. PURPOSES OF THE FOUNDATION; CHARITABLE CONTRIBUTIONS.................... 10 4.3. BOARD OF DIRECTORS OF THE FOUNDATION.................................... 10 ARTICLE 5. SHARES TO BE OFFERED................................................. 10 5.1. HOLDING COMPANY COMMON STOCK............................................ 11 5.2. INDEPENDENT VALUATION, PURCHASE PRICE AND NUMBER OF SHARES.............. 11 ARTICLE 6. SUBSCRIPTION RIGHTS AND ORDERS FOR COMMON STOCK...................... 12 6.1. DISTRIBUTION OF PROSPECTUS.............................................. 12 6.2. ORDER FORMS............................................................. 13 6.3. UNDELIVERED, DEFECTIVE OR LATE ORDER FORM; INSUFFICIENT PAYMENT......... 14 6.4. PAYMENT FOR STOCK....................................................... 14 ARTICLE 7. STOCK PURCHASE PRIORITIES............................................ 15 7.1. PRIORITIES FOR OFFERING................................................. 15 7.2. CERTAIN DETERMINATIONS.................................................. 15 7.3. MINIMUM PURCHASE; NO FRACTIONAL SHARES.................................. 15 7.4. OVERVIEW OF PRIORITIES.................................................. 15 7.5. PRIORITIES FOR SUBSCRIPTION OFFERING.................................... 15
- ii - 7.6. PRIORITIES FOR DIRECT COMMUNITY OFFERING................................ 17 7.7. PRIORITIES FOR SYNDICATED COMMUNITY OFFERING............................ 19 ARTICLE 8. ADDITIONAL LIMITATIONS ON PURCHASES.................................. 19 8.1. GENERAL................................................................. 19 8.2. INDIVIDUAL MAXIMUM PURCHASE LIMIT....................................... 19 8.3. GROUP ACTING IN CONCERT................................................. 20 8.4. PURCHASES BY OFFICERS, DIRECTORS, TRUSTEES AND CORPORATORS.............. 20 8.5. SPECIAL RULE FOR TAX-QUALIFIED EMPLOYEE PLANS........................... 20 8.6. INCREASE IN THE TOTAL NUMBER OF SHARES OFFERED.......................... 20 8.7. ILLEGAL PURCHASES....................................................... 20 8.8. REJECTION OF ORDERS..................................................... 21 8.9. SUBSCRIBERS IN NON-QUALIFIED STATES OR IN FOREIGN COUNTRIES............. 21 8.10. NO OFFER TO TRANSFER SHARES............................................ 21 8.11. CONFIRMATION BY PURCHASERS............................................. 21 ARTICLE 9. POST OFFERING MATTERS................................................ 22 9.1. STOCK PURCHASES AFTER THE CONVERSION.................................... 22 9.2. RESALES OF STOCK BY MANAGEMENT PERSONS.................................. 22 9.3. STOCK CERTIFICATES...................................................... 22 9.4. RESTRICTION ON FINANCING STOCK PURCHASES................................ 22 9.5. STOCK BENEFIT PLANS..................................................... 22 9.6. MARKET FOR HOLDING COMPANY COMMON STOCK................................. 23 9.7. LIQUIDATION ACCOUNT..................................................... 23 9.8. PAYMENT OF DIVIDENDS.................................................... 25 9.9. REPURCHASE OF STOCK..................................................... 25 9.10. CONVERSION EXPENSES.................................................... 25 9.11. PUBLIC INSPECTION OF CONVERSION APPLICATION............................ 25 9.12. ENFORCEMENT OF TERMS AND CONDITIONS.................................... 25 9.13. VOTING RIGHTS IN CONVERTED BANK........................................ 26 ARTICLE 10. MISCELLANEOUS....................................................... 26 10.1. INTERPRETATION OF PLAN................................................. 26 10.2. AMENDMENT OR TERMINATION OF THE PLAN................................... 26
Exhibit 3.4 -- Proposed Charter and Bylaws of the Stock Holding Company Exhibit 3.5 -- Proposed Amended and Restated Charter and Bylaws of the Bank Exhibit 3.7 -- Initial Members of the Board of Directors of the Stock Holding Company - iii - BENJAMIN FRANKLIN BANCORP, M.H.C. PLAN OF CONVERSION ARTICLE 1. INTRODUCTION - BUSINESS PURPOSE The Board of Trustees of Benjamin Franklin Bancorp, M.H.C., a Massachusetts-chartered mutual holding company (the "MHC"), has determined that it is in the best interests of the MHC, of Benjamin Franklin Savings Bank,(1) a Massachusetts-chartered stock savings bank and wholly owned subsidiary of the MHC (the "BANK"), of the depositors and customers of the Bank, and of the communities served by the Bank and the MHC for the MHC to convert from a mutual institution to a stock-form institution (the "CONVERSION"). Capitalized terms used but not defined in this Article 1 shall have the meaning set forth in Article 2 hereof. In order to carry out the Conversion, the Board of Trustees of the MHC has adopted this Plan of Conversion (the "PLAN") to be carried out under the laws of The Commonwealth of Massachusetts and the regulations of the Massachusetts Division of Banks, and other applicable laws and regulations. Pursuant to the Plan, the MHC will convert to a Massachusetts-chartered stock form corporation known as Benjamin Franklin Bancorp, Inc. (the "STOCK HOLDING COMPANY") and offer Holding Company Conversion Stock in the Conversion on a priority basis to qualifying depositors, Tax-Qualified Employee Plans, and Employees, Officers, directors and trustees of the Bank and the MHC, with any remaining shares to be offered to the public in a Direct Community Offering and possibly in a Syndicated Community Offering. One of the primary purposes of the Conversion is to enable the MHC to acquire Chart Bank, a Massachusetts-chartered stock co-operative bank ("CHART BANK"). Pursuant to an Agreement and Plan of Merger dated September 1, 2004 ("AFFILIATION AGREEMENT") by and among the MHC, the Bank and Chart, each issued and outstanding share of Chart common stock will be exchanged for either cash or shares of Holding Company Common Stock, and Chart Bank will be merged with the Bank (the "CHART ACQUISITION") at a closing to take place immediately after the consummation of the Conversion. The Conversion will generate capital to pay the cash portion of the consideration to be paid to the holders of Chart Bank common stock, and will make it possible for the Stock Holding Company to issue shares of Holding Company Common Stock as the stock portion of the consideration to be paid to holders of Chart common stock. The combination of the Conversion and the Chart Acquisition is intended to enable the Bank to compete and expand more effectively in the financial services marketplace. The Conversion is intended to provide an additional source of capital not now available to the MHC or the Bank. Under the Plan, the Stock Holding Company will issue capital stock to depositors and other members of the public, and intends to use a portion of the capital raised through such issuance to pay the cash portion of the consideration to be paid in the Chart Acquisition. The Stock Holding Company will use the remaining capital raised, directly or after investing such - -------- (1) In connection with the Conversion, the Bank intends to change its name to "Benjamin Franklin Bank." capital into the Bank, to further the expansion of the activities of the Stock Holding Company and the Bank. In addition, after the Conversion, the Stock Holding Company would have the ability to issue additional shares of Holding Company Common Stock to raise additional capital or in connection with additional mergers or acquisitions, although no additional capital issuance and no merger or acquisition (other than the Chart Acquisition) are planned or contemplated at the present time. In addition, stock ownership by Officers and other Employees of the Stock Holding Company and the Bank has proven to be an effective performance incentive and as a means of attracting and retaining qualified personnel. Finally, the Board of Directors, Board of Trustees and senior management also believe that the Conversion will be beneficial to the population within the primary market area. The Conversion will provide local customers and other residents with an opportunity to become equity owners of the Bank, and thereby participate in the possible stock price appreciation and cash dividends, which is consistent with the objective of being a locally-owned financial institution servicing local financial needs. The Board and management believe that, through expanded local stock ownership, current customers and non-customers who purchase Holding Company Conversion Stock will seek to enhance the financial success of the Bank through consolidation of their banking business and increased referrals to the Bank. The Conversion and the Chart Acquisition are expected to close on the same date and at substantially the same time. The Conversion, however, is not conditioned upon the consummation of Chart Acquisition. In furtherance of the MHC's commitment to its community, the MHC intends to form a charitable foundation (the "Foundation") as part of the Conversion. The Foundation is intended to complement the Bank's community reinvestment activities in a manner that will allow the Bank's local communities to share in the growth and profitability of the Stock Holding Company and the Bank over the long term. Consistent with the Bank's goal, the Stock Holding Company intends, immediately following the Conversion, to donate to the Foundation a number of shares of its authorized but unissued Common Stock in an amount up to 8.0% of the lesser of (i) the number of shares actually sold in the Conversion or (ii) the number of shares that would have been sold at the midpoint of the Estimated Valuation Range. The Chart Acquisition is subject to the approval of various regulatory agencies, and must also be approved by the affirmative vote of at least (i) two-thirds of the MHC's Corporators present and eligible to vote at the meeting called for approval of such Acquisition and (ii) the holders of two thirds of issued and outstanding capital stock of Chart. In addition, individuals purchasing Holding Company Conversion Stock will, by executing their order to purchase such Holding Company Conversion Stock, consent to and approve of the Chart Acquisition. The Plan is subject to the approval of various regulatory agencies, and must also be approved by the affirmative vote of a majority of the total votes of the MHC's Corporators and a majority of the MHC's Independent Corporators (who shall constitute not less than 60% of all of the MHC's Corporators) at an annual meeting or a special meeting called for such purpose. By approving the Plan, the Corporators will also be approving the charter and bylaws of each of the Stock Holding Company and the Bank and all other steps necessary or incidental to the Conversion. - 2 - The Bank became a stock-form subsidiary of the MHC when Benjamin Franklin Savings Bank reorganized into mutual holding company form in 1995. Accordingly, the Conversion will not affect the corporate existence of the Bank. Although the Plan does provide that certain amendments will be made to the Bank's corporate charter and bylaws, the Bank's business and operations will not be affected or interrupted by the Conversion, and the Bank will continue as the same legal entity after the Conversion. The deposit accounts and loan accounts of the Bank's customers will not be affected by the Conversion. Upon Conversion, each deposit account holder of the Bank will continue to hold exactly the same deposit account as the holder held immediately before the Conversion. All deposit accounts in the Bank following the Conversion will continue to be insured up to the legal maximum by the Federal Deposit Insurance Corporation and the Deposit Insurance Fund of the Depositors Insurance Fund in the same manner as such deposit accounts were insured immediately before the Conversion. There will be no change in the Bank's loans. The Conversion will not result in any reduction of the Bank's reserves or net worth. ARTICLE 2. DEFINITIONS As used in the Plan, the terms set forth below have the following meanings: 2.1. ACTING IN CONCERT. The term "ACTING IN CONCERT" means (a) knowing participation in a joint activity or conscious parallel action towards a common goal, whether or not pursuant to an express agreement; or (b) Persons seeking to combine or pool their voting or other interests (such as subscription rights) in the securities of an issuer for a common purpose, pursuant to any contract, understanding, relationship, agreement or other arrangement, whether written or otherwise. When Persons act together for such purpose, their group is deemed to have acquired their stock. The determination of whether a group is Acting in Concert shall be made solely by the Board of Trustees of the MHC or Officers delegated by such Board and may be based on any evidence upon which the Board or such delegatee chooses to rely, including, without limitation, joint account relationships or the fact that such Persons have filed joint Schedules 13D with the SEC with respect to other companies. Persons living at the same address, whether or not related, will be deemed to be Acting in Concert unless otherwise determined by the Board or such delegatee. Trustees of the MHC and directors of the Stock Holding Company and the Bank shall not be deemed to be Acting in Concert solely as a result of their membership on any such board or boards. 2.2. AFFILIATE. An "AFFILIATE" of, or a Person "AFFILIATED" with, a specified Person, is a Person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with the Person specified. 2.3. APPLICATION. The application, including a copy of the Plan, submitted by the MHC to the Commissioner for approval of the Conversion. 2.4. ASSOCIATE. The term "ASSOCIATE," when used to indicate a relationship with any Person, means: (i) any corporation or organization (other than the Bank, the Stock Holding Company, the MHC or a majority-owned subsidiary of any thereof) of which such Person is a director, Officer or partner or is, directly or indirectly, the beneficial owner of 10% or more of - 3 - any class of equity securities; (ii) any trust or other estate in which such Person has a substantial beneficial interest or as to which such Person serves as trustee or in a similar fiduciary capacity; (iii) any relative or spouse of such Person or any relative of such spouse, who has the same home as such Person or who is a director or trustee or officer of the MHC or the Bank; and (iv) any Person Acting in Concert with any of the Persons or entities specified in clauses (i) through (iii) above; provided, however, that any Tax-Qualified or Non-Tax-Qualified Employee Plan shall not be deemed to be an Associate of any director, trustee or Officer of the MHC, the Stock Holding Company or the Bank, to the extent provided in the Plan. When used to refer to a Person other than an Officer or director of the Bank, the MHC or the Stock Holding Company, the MHC in its sole discretion may determine the Persons that are Associates of other Persons. Trustees of the MHC and directors of the Stock Holding Company and the Bank shall not be deemed to be Associates solely as a result of their membership on such Board. 2.5. BANK. Benjamin Franklin Savings Bank, which will change its name to Benjamin Franklin Bank in connection with the Conversion. 2.6. BHCA. The Bank Holding Company Act of 1956, as amended. 2.7. COMMISSIONER. The Commissioner of Banks of The Commonwealth of Massachusetts. 2.8. COMMUNITY OFFERING. A Direct Community Offering and/or a Syndicated Community Offering. 2.9. CONVERSION. (1) The conversion of the MHC into the Stock Holding Company by amendment of the MHC's charter and bylaws to authorize the issuance of capital stock or by such other means as the Commissioner and the FRB shall approve under the Regulations, (2) the offering of Holding Company Conversion Stock in a Subscription Offering and, to the extent shares remain available, in a Direct Community Offering and possibly in a Syndicated Community Offering; (3) the issuance of the Holding Company Conversion Stock, (4) the amendment of the Bank's charter and bylaws as contemplated in the Plan; and (5) the consummation of the related transactions provided for in the Plan. 2.10. CORPORATOR. A member of the MHC's Board of Corporators. 2.11. DEPOSIT ACCOUNT. Any withdrawable deposit account offered by the Bank, including, without limitation, savings accounts, NOW account deposits, certificates of deposit, demand deposits, Keogh Plan, SEPs and IRA accounts for which the Bank acts as custodian or trustee, and such other types of deposit accounts as may then have been authorized by Massachusetts or federal law and regulations, but not including repurchase agreements, savings bank life insurance policies or certain escrow accounts. 2.12. DIRECT COMMUNITY OFFERING. The offering for sale directly by the Stock Holding Company of Holding Company Conversion Stock (i) to the Local Community, as provided in Section 7.6 of the Plan, with preference given to natural persons residing in the Local Community, and then (ii) to the public at large. The Direct Community Offering may be conducted simultaneously with the Subscription Offering. 2.13. DIVISION. The Division of Banks of The Commonwealth of Massachusetts. - 4 - 2.14. ELIGIBLE ACCOUNT HOLDER. Any Person holding a Qualifying Deposit on the Eligibility Record Date. 2.15. ELIGIBILITY RECORD DATE. May 31, 2003, the date for determining who qualifies as an Eligible Account Holder. 2.16. EMPLOYEE. The term "EMPLOYEE" does not include a trustee, director or Officer. 2.17. EMPLOYEE PLAN. Any Tax-Qualified Employee Plan or Non-Tax-Qualified Employee Benefit Plan. 2.18. ESOP. The employee stock ownership plan to be established by the Bank. 2.19. ESTIMATED VALUATION RANGE. The dollar range of the proposed Offering, as determined by the Independent Appraiser before the Offering and as it may be amended from time to time thereafter. The Estimated Valuation Range may vary within 15% above or 15% below the midpoint of such range, with a possible adjustment by up to 15% above the Range Maximum. 2.20. EXCHANGE ACT. The Securities Exchange Act of 1934, as amended. 2.21. FDIC. The Federal Deposit Insurance Corporation. 2.22. FRB. The Board of Governors of the Federal Reserve System. 2.23. FRB APPLICATION. The application to be submitted by the MHC to the FRB seeking the FRB's prior approval of the MHC's conversion from mutual to stock form. 2.24. FOUNDATION. A charitable foundation established and funded by the Stock Holding Company immediately following the Conversion as contemplated by Article 4 hereof. The Foundation will qualify as an exempt organization under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended. 2.25. GROUP MAXIMUM PURCHASE LIMIT. The limitation on the purchase of shares of Holding Company Conversion Stock established by Section 8.3, as such limit may be increased pursuant to said Section 8.3. 2.26. HOLDING COMPANY COMMON STOCK. The common stock authorized to be issued from time to time by the Stock Holding Company. 2.27. HOLDING COMPANY CONVERSION STOCK. The Holding Company Common Stock to be issued by the Stock Holding Company in the Conversion, including the Merger Shares, if any, issued as described in Section 7.6.4. 2.28. INDEPENDENT APPRAISER. The appraiser retained by the MHC to prepare an appraisal of the pro forma market value of the Holding Company Conversion Stock. 2.29. INDEPENDENT CORPORATOR. A Corporator who is not an Employee, Officer, or trustee of the MHC or an Employee, Officer, director, or "significant borrower" of the Bank as determined by the Commissioner. - 5 - 2.30. INDEPENDENT VALUATION. The estimated pro forma market value of the Holding Company Conversion Stock as determined by the Independent Appraiser. 2.31. INDIVIDUAL MAXIMUM PURCHASE LIMIT. The limitation on the purchase of shares of Holding Company Conversion Stock established by Section 8.2, as such limit may be increased pursuant to said Section 8.2. 2.32. INFORMATION STATEMENT. The information statement required to be sent to the Corporators in connection with the Special Meeting. 2.33. LIQUIDATION ACCOUNT. The liquidation account established pursuant to Section 9.7 of the Plan. 2.34. LOCAL COMMUNITY. The Massachusetts counties of Norfolk, Middlesex and Worcester. 2.35. MARKETING AGENT. The broker-dealer responsible for organizing and managing the Conversion and sale of the Holding Company Conversion Stock. 2.36. MARKET MAKER. A dealer (i.e., any Person who engages directly or indirectly as agent, broker, or principal in the business of offering, buying, selling or otherwise dealing or trading in securities issued by another Person) who, with respect to a particular security, (i) regularly publishes bona fide competitive bid and offer quotations on request, and (ii) is ready, willing and able to effect transactions in reasonable quantities at the dealer's quoted prices with other brokers or dealers. 2.37. MERGER SHARES. Shares of Holding Company Common Stock issued to stockholders of Chart Bank in consideration of the Chart Acquisition, whether pursuant to Section 7.6.4 or otherwise. 2.38. MHC. Benjamin Franklin Bancorp, M.H.C., the Massachusetts-chartered holding company for the Bank as it exists in mutual form prior to the Conversion. 2.39. NON-TAX-QUALIFIED EMPLOYEE BENEFIT PLAN. Any defined benefit plan or defined contribution plan which is not qualified under Section 401 of the Internal Revenue Code. 2.40. OFFERING. The Subscription Offering, the Direct Community Offering and the Syndicated Community Offering. 2.41. OFFICER. The Chairman of the Board, the President, any officer of the level of vice president or above, the Clerk and the Treasurer of the Bank, the MHC or the Stock Holding Company, as the case may be. 2.42. PERSON. An individual, corporation, partnership, association, joint-stock company, trust (including Individual Retirement Accounts, SEPs and Keogh Accounts), unincorporated organization, government entity or political subdivision thereof or any other entity. 2.43. PLAN. This Plan of Conversion. - 6 - 2.44. QUALIFYING DEPOSIT. The aggregate balances of all Deposit Accounts of an Eligible Account Holder as of the close of business on the Eligibility Record Date or of a Supplemental Eligible Account Holder as of the close of business on the Supplemental Eligibility Record Date, as the case may be, provided that such aggregate balance is not less than $50. 2.45. RANGE MAXIMUM. The valuation which is 15% above the midpoint of the Estimated Valuation Range, as defined in Section 2.19. 2.46. RANGE MINIMUM. The valuation which is 15% below the midpoint of the Estimated Valuation Range, as defined in Section 2.19. 2.47. REGULATIONS. The regulations of the Division regarding mutual to stock conversions mutual holding companies and the applicable regulations of the Office of Thrift Supervision (as administered by the FRB), to the extent that such Office of Thrift Supervision regulations do not conflict with the regulations of the Division. 2.48. SEC. The Securities and Exchange Commission. 2.49. SPECIAL MEETING. The Special Meeting of Corporators called for the purpose of voting on the Plan and the Chart Acquisition. 2.50. STOCK HOLDING COMPANY. The stock-form holding company that (x) will be result from the conversion of the MHC as provided in the Plan, (y) issue Holding Company Conversion Stock in the Conversion, and (z) continue to own 100% of the common stock of the Bank. The Stock Holding Company will be a Massachusetts-chartered corporation known as Benjamin Franklin Bancorp, Inc. 2.51. SUBSCRIPTION OFFERING. The offering of Holding Company Conversion Stock for subscription by Persons holding subscription rights pursuant to the Plan. 2.52. SUBSCRIPTION PRICE. The price per share, determined as provided in Section 5.2 of the Plan, at which the Holding Company Conversion Stock will be sold in the Offering. 2.53. SUBSIDIARY. A company that is controlled by another company, either directly or indirectly through one or more subsidiaries. 2.54. SUPPLEMENTAL ELIGIBLE ACCOUNT HOLDER. Any Person (other than Officers, Directors, Trustees, or Corporators of the MHC and the Bank and their Associates) holding a Qualifying Deposit on the Supplemental Eligibility Record Date. 2.55. SUPPLEMENTAL ELIGIBILITY RECORD DATE. The supplemental record date for determining who qualifies as a Supplemental Eligible Account Holder. The Supplemental Eligibility Record Date shall be the last day of the calendar quarter preceding the Commissioner's approval of the Application. 2.56. SYNDICATED COMMUNITY OFFERING. At the discretion of the MHC, the offering of Holding Company Conversion Stock following or contemporaneously with the Direct Community Offering through a syndicate of broker-dealers. - 7 - 2.57. TAX-QUALIFIED EMPLOYEE PLAN. Any defined benefit plan or defined contribution plan (including the ESOP, any stock bonus plan, profit-sharing plan, 401(k) plan or other plan) of the Bank, the Stock Holding Company, the MHC or any of their Affiliates, which, with its related trusts, meets the requirements to be qualified under Section 401 of the Internal Revenue Code. ARTICLE 3. GENERAL PROCEDURE FOR CONVERSION 3.1. PRECONDITIONS TO CONVERSION. The Conversion is expressly conditioned upon prior occurrence of the following: 3.1.1 Approval of the Plan by the affirmative vote of a majority of the Corporators at a regular or special meeting of such Corporators (and, if required by regulatory authorities, by the affirmative vote of a majority of Independent Corporators (who shall constitute not less than 60% of all Corporators)). 3.1.2 Approval by the Commissioner of the Application, including the Plan and the Charter and Bylaws of the Stock Holding Company and of the Bank. 3.1.3 Approval by the FRB of the FRB Application. 3.2. SUBMISSION OF PLAN TO COMMISSIONER AND FRB. Upon approval by at least two-thirds of all Trustees of the MHC, the Plan will be submitted to the Commissioner as part of the Application, and to the FRB as part of the FRB Application, together with a copy of the proposed Information Statement and all other material required by the Regulations, for approval by the Commissioner and the FRB. The MHC must also receive either private letter rulings from the Internal Revenue Service and the Massachusetts Department of Revenue or opinions of its counsel as to the federal income tax consequences of the Conversion and of its tax accountants as to the Massachusetts income tax consequences of the Conversion, in either case substantially to the effect that the Conversion will not result in any adverse federal or Massachusetts income tax consequence to the MHC, the Bank, the Stock Holding Company, Eligible Account Holders or Supplemental Eligible Account Holders. Upon a determination by the Commissioner that the Application is complete, the MHC will publish and post public announcements and notices of the Application as required by the Commissioner and the Regulations. 3.3. SPECIAL MEETING OF CORPORATORS TO APPROVE THE PLAN. Following approval of the Plan by the Commissioner, the Special Meeting shall be scheduled in accordance with the MHC's Bylaws, and the Plan (as revised in response to comments received from the Commissioner and the FRB), proposed revisions and amendments to the charters and bylaws of the Bank and the Stock Holding Company, and any information required pursuant to the Regulations, will be submitted to the Corporators for their consideration and approval at the Special Meeting. The MHC will mail to each Corporator a copy of the Information Statement not less than seven (7) days before the Special Meeting. Following approval of the Plan by the Corporators, the MHC intends to take such steps as may be appropriate pursuant to applicable laws and regulations to convert the MHC to a Massachusetts-chartered stock form holding company. - 8 - 3.4. STOCK HOLDING COMPANY CHARTER AND BYLAWS. Copies of the proposed Charter and Bylaws of the Stock Holding Company are attached hereto as Exhibit 3.4, and are made a part of the Plan. By their approval of the Plan, the Corporators shall have approved and adopted the Charter and Bylaws of the Stock Holding Company. 3.5. BANK CHARTER AND BYLAWS. Copies of the proposed amended and restated Charter and Bylaws of the Bank are attached hereto as Exhibit 3.5, and are made a part of the Plan. By their approval of the Plan, the Trustees, as the governing body of the sole stockholder of the Bank, have approved and adopted the amended and restated Charter and Bylaws of the Bank. 3.6. OFFER AND SALE OF HOLDING COMPANY CONVERSION STOCK. 3.6.1 If the Corporators approve the Plan, and upon receipt of all required regulatory approvals, the Holding Company Conversion Stock will be offered for sale in a Subscription Offering simultaneously to Eligible Account Holders, Supplemental Eligible Account Holders, any Tax-Qualified Employee Benefit Plan, and directors, trustees, Officers and Employees in the manner set forth in Article 7 hereof. The Subscription Offering period will run for no less than twenty (20) but no more than forty-five (45) days from the date of distribution of the Subscription Offering materials, unless extended by the MHC with the approval of the Commissioner and the FRB, if required. If feasible, any Holding Company Conversion Stock remaining will then be sold to the general public through a Direct Community Offering as provided in Article 7 hereof, which may be held either subsequent to or concurrently with the Subscription Offering. 3.6.2 If feasible, any shares of Holding Company Conversion Stock remaining unsold after completion of the Subscription Offering and a Direct Community Offering may, in the sole discretion of the MHC, either be applied toward the Merger Shares as described in Section 7.6.4 or sold in a Syndicated Community Offering (which may commence following or contemporaneously with the Direct Community Offering). If for any reason a Syndicated Community Offering cannot be effected, the MHC will either apply such unsubscribed Holding Company Conversion Stock toward the Merger Shares as described in Section 7.6.4 or use its best efforts to obtain other purchasers, or both, in order to meet the Range Minimum, subject to the approval of the Commissioner and the FRB, if required. The sale of all shares of Holding Company Conversion Stock to be sold pursuant to this Plan must be completed within forty-five (45) days after termination of the Subscription Offering, subject to the extension of such forty-five (45) day period by the MHC with the approval of the Commissioner and the FRB, if required. The MHC may seek one or more extensions of such forty-five (45) day period if necessary to complete the sale of all shares of Holding Company Conversion Stock. If all available shares of Holding Company Conversion Stock are sold in the Subscription Offering and any Direct Community Offering, there will be no Syndicated Community Offering and the Conversion will be consummated upon completion of the Subscription Offering or the Direct Community Offering, as the case may be. 3.7. CONVERSION OF MHC TO STOCK HOLDING COMPANY. Upon the consummation of the Conversion the MHC will be converted into the Stock Holding Company. The Stock Holding Company will be chartered as a Massachusetts corporation and will be authorized to exercise any and all powers, rights and privileges, and will be subject to all limitations applicable to bank - 9 - holding companies under applicable laws and regulations. The initial members of the Board of Directors of the Stock Holding Company will be those Persons whose names are set forth on Exhibit 3.7 to the Plan, each to hold office until the Annual Meeting (or Special Meeting in lieu thereof) in the year set forth opposite their respective names on such Exhibit 3.7, and until their successors are elected and have been qualified, and otherwise in accordance with the Charter and By-Laws of the Stock Holding Company. The Officers of the MHC immediately prior to the Conversion shall be the initial Officers of the Stock Holding Company, in each case to serve at the pleasure of the Board of Directors of the Stock Holding Company. The Stock Holding Company, as successor in interest to the MHC, will continue to own 100% of the common stock of the Bank. The Stock Holding Company expects to contribute to the Bank as additional capital at least half of the net proceeds remaining after the payment of expenses of the Conversion; provided that the capital contributed to the Bank will include the amount of Conversion proceeds applied toward the cash portion of the purchase price in the Chart Acquisition. ARTICLE 4. ESTABLISHMENT AND FUNDING OF CHARITABLE FOUNDATION. 4.1. ESTABLISHMENT OF THE FOUNDATION. As part of the Conversion, the Stock Holding Company intends to establish the Foundation which will qualify as an exempt organization under Section 501(c)(3) of the Internal Revenue Code and to donate to the Foundation a number of shares of its authorized but unissued Common Stock in an amount up to 8.0% of the lesser of (i) the number of shares actually sold in the Conversion or (ii) the number of shares that would have been sold at the midpoint of the Estimated Valuation Range. 4.2. PURPOSES OF THE FOUNDATION; CHARITABLE CONTRIBUTIONS. The Foundation is being formed in connection with the Conversion in order to complement the Bank's existing community reinvestment activities and to share with the Bank's community a part of the Bank's financial success as a locally headquartered, community minded, financial services institution. The funding of the Foundation with Holding Company Common Stock accomplishes this goal as it enables the community to share in the growth and profitability of the Stock Holding Company and the Bank over the long term. The Foundation will be dedicated to the promotion of charitable purposes including community development, grants or donations to support housing assistance, not-for-profit community groups and other types of organizations or civic minded projects. The Foundation will annually distribute total grants to assist charitable organizations or to fund projects within the Bank's community of not less than five percent (5.0%) of the average fair value of Foundation assets each year, less certain expenses. In order to serve the purposes for which it was formed and maintain its Section 501(c)(3) qualification, the Foundation may sell, on an annual basis, a portion of the Holding Company Common Stock contributed to it by the Holding Company. 4.3. BOARD OF DIRECTORS OF THE FOUNDATION. The board of directors of the Foundation will consist of a majority of individuals who are directors of the Bank. The board of directors of the Foundation will be responsible for establishing the policies of the Foundation with respect to grants or donations, consistent with the stated purposes of the Foundation. - 10 - ARTICLE 5. SHARES TO BE OFFERED 5.1. HOLDING COMPANY COMMON STOCK. The Holding Company Common Stock shall be fully paid and nonassessable. The total number of shares of Holding Company Common Stock authorized under the Stock Holding Company's Charter will exceed the number of shares of Holding Company Conversion Stock to be issued to the Stock Holding Company stockholders in the Conversion and shares of Holding Company Common Stock to be issued to holders of Chart common stock in the Acquisition. HOLDING COMPANY COMMON STOCK WILL NOT BE COVERED BY DEPOSIT INSURANCE. 5.2. INDEPENDENT VALUATION, PURCHASE PRICE AND NUMBER OF SHARES. 5.2.1 INDEPENDENT VALUATION. An Independent Appraiser shall be employed by the MHC to provide it with an Independent Valuation as required by the Regulations, which value shall be included in the prospectus (as described in Section 6.1 of this Plan) filed with the Commissioner and the SEC. The Trustees of the MHC shall thoroughly review and analyze the methodology and fairness of the Independent Valuation. The Independent Valuation will be made by a written report to the MHC, contain the factors upon which the Independent Valuation was made and conform to procedures adopted by the Commissioner and the FRB. The Independent Valuation provided by the Independent Appraiser to the MHC before the commencement of the Subscription Offering will contain an Estimated Valuation Range of aggregate prices for the Holding Company Conversion Stock, which range shall reflect the anticipated pro forma market value of the Holding Company Conversion Stock. Such Estimated Valuation Range will establish a midpoint and will vary within 15% above (the "RANGE MAXIMUM") to 15% below (the "RANGE MINIMUM") such midpoint. The Independent Appraiser shall also present to the MHC at the close of the Subscription Offering a valuation of the pro forma market value of the Holding Company Conversion Stock. 5.2.2 SUBSCRIPTION PRICE. All shares sold in the Conversion will be sold at a uniform price per share (the "SUBSCRIPTION PRICE"), which is expected to be determined before the commencement of the Offering. If there is a Syndicated Community Offering, the price per share at which the Holding Company Conversion Stock is sold in such Syndicated Community Offering shall be equal to the per share purchase price of the shares sold in the Subscription Offering and the Direct Community Offering. The aggregate purchase price for all shares of Holding Company Conversion Stock will be equal to the estimated consolidated pro forma market value of the Holding Company Conversion Stock, as determined for such purpose by the Independent Appraiser. 5.2.3 NUMBER OF SHARES. The total number of shares (and a range thereof) of Holding Company Conversion Stock to be issued and offered for sale will be determined by the MHC immediately before the commencement of the Subscription Offering based on the Independent Valuation, the Estimated Valuation Range and the Subscription Price. The Independent Valuation, and such number of shares, shall be subject to adjustment thereafter if necessitated by market or financial conditions, with the approval of the Commissioner and the FRB, if necessary. In particular, the total number of shares may be increased by up to 15% above the Range Maximum if the Independent Valuation is increased subsequent to the commencement of the Subscription Offering to reflect changes in market and financial conditions and the resulting aggregate purchase price is not more than 15% above the Range Maximum. - 11 - 5.2.4 INCREASE OR DECREASE IN NUMBER OF SHARES. The number of shares of Holding Company Conversion Stock may be increased or decreased by the MHC, subject to the following provisions. In the event that the aggregate purchase price of the number of shares of Holding Company Conversion Stock ordered is below the minimum of the Estimated Valuation Range, or materially above the Range Maximum, resolicitation of purchasers may be required, provided, however, that a resolicitation will not be required (i) if the number of shares increases by up to 15% above the Range Maximum, or (ii) if the Range Minimum is achieved by applying Holding Company Conversion Stock toward the Merger Shares as described in Section 7.6.4. Any such resolicitation shall be effected in such manner and within such time as the MHC shall establish, with the approval of the Commissioner and the FRB, if required. 5.2.5 CONFIRMATION OF VALUATION. Notwithstanding the foregoing, no sale of Holding Company Conversion Stock may be consummated unless, before such consummation, the Independent Appraiser confirms to the MHC and to the Commissioner and the FRB that, to the best knowledge of the Independent Appraiser, nothing of a material nature has occurred which, taking into account all relevant factors, would cause the Independent Appraiser to conclude that the aggregate value of all shares of Holding Company Conversion Stock ordered, at the Subscription Price, is incompatible with its estimate of the aggregate consolidated pro forma market value of the Holding Company Conversion Stock. An increase in the aggregate value of the Holding Company Conversion Stock by up to 15% above the Range Maximum would not be deemed to be material. If such confirmation is not received, the MHC may cancel the Conversion, resolicit and extend the Conversion and establish a new Subscription Price and/or Estimated Valuation Range, or hold a new Conversion or take such other action as the Commissioner and the FRB may permit. The estimated pro forma market value of the Holding Company Conversion Stock shall be determined for such purpose by an Independent Appraiser on the basis of such appropriate factors as are not inconsistent with the Regulations and will be confirmed upon completion of the Conversion. In any case, the total number of shares of Holding Company Conversion Stock to be issued and sold will be determined by the MHC as follows: (a) the estimated aggregate pro forma market value of the Holding Company Conversion Stock, immediately after Conversion as determined by the Independent Appraiser, expressed in terms of a specific aggregate dollar amount rather than as a range, shall be divided by (b) the Subscription Price. ARTICLE 6. SUBSCRIPTION RIGHTS AND ORDERS FOR COMMON STOCK 6.1. DISTRIBUTION OF PROSPECTUS. The Conversion shall be conducted in compliance with the Regulations and applicable SEC regulations. As soon as practicable after the prospectus prepared by the MHC has been declared effective by the Commissioner and the SEC, copies of the prospectus and order forms will be distributed to all Eligible Account Holders, Supplemental Eligible Account Holders, any Tax-Qualified Employee Plan and Employees, Officers, directors and trustees at their last known addresses appearing on the records of the Bank for the purpose of subscribing for shares of Holding Company Conversion Stock in the Subscription Offering and will be made available (if and when a Community Offering is held) for use by those Persons entitled to purchase in the Community Offering. Instead of distributing the prospectus and order forms, the MHC may distribute a notice of availability of the prospectus and the order form, together with a request card and a postage-prepaid return envelope for use in requesting such prospectus and order form. If the latter method is employed by the MHC, such notices shall be - 12 - mailed to those eligible to subscribe in the Subscription Offering not less than thirty (30) calendar days before the expiration of the Subscription Offering. 6.2. ORDER FORMS. Each order form will be preceded or accompanied by the prospectus describing the Stock Holding Company, the Bank, the Chart Acquisition, the Holding Company Conversion Stock and the Subscription and Community Offerings. Each order form will contain, among other things, the following: 6.2.1 A specified date by which all order forms must be received by the MHC, which date shall be not less than 20 nor more than 45 days following the date on which the order forms are mailed by the MHC, and which date will constitute the expiration of the Subscription Offering, unless extended; 6.2.2 The Subscription Price per share for shares of Holding Company Conversion Stock to be sold in the Offering; 6.2.3 A description of the minimum and maximum number of shares of Holding Company Conversion Stock that may be subscribed for pursuant to the exercise of subscription rights or otherwise purchased in the Offering; 6.2.4 Instructions as to how the recipient of the order form is to indicate thereon the number of shares of Holding Company Conversion Stock for which such Person elects to subscribe and the available alternative methods of payment therefor; 6.2.5 An acknowledgment that the recipient of the order form has received a copy of the prospectus before execution of the order form; 6.2.6 A statement indicating the consequences of failing to properly complete and return the order form, including a statement to the effect that all subscription rights are nontransferable, will be void at the end of the Subscription Offering, and can only be exercised by delivering to the MHC within the Subscription Offering period such properly completed and executed order form, together with a check or money order in the full amount of the purchase price as specified in the order form for the shares of Holding Company Conversion Stock for which the recipient elects to subscribe in the Subscription Offering (or by authorizing on the order form that the Bank withdraw said amount from the Deposit Account at the Bank maintained by such Person, but only if the MHC elects to permit such withdrawals from the type of such Deposit Account); 6.2.7 A statement to the effect that the executed order form, once received by the MHC, may not be modified or amended by the subscriber without the consent of the MHC; and 6.2.8 An acknowledgment by the Person submitting the order form that such Person understands and agrees that by submitting such order form such Person is approving the Chart Acquisition and is voting by written consent (pursuant to M.G.L. ch. 156D, Section. 7.04) all Holding Company Conversion Stock to be purchased by such Person in favor of the Chart Acquisition. Notwithstanding the above, the MHC reserves the right in its sole discretion to accept or - 13 - reject orders received on photocopied or faxed order forms. 6.3. UNDELIVERED, DEFECTIVE OR LATE ORDER FORM; INSUFFICIENT PAYMENT. In the event order forms (a) are not delivered for any reason or are returned undelivered to the MHC by the United States Postal Service, (b) are not received back by the MHC or are received by the MHC after the expiration date specified thereon, (c) are defectively filled out or executed, (d) are not accompanied by the full required payment for the shares of Holding Company Conversion Stock subscribed for (including cases in which Deposit Accounts from which withdrawals are authorized are insufficient to cover the amount of the required payment), or (e) are not mailed pursuant to a "NO MAIL" order placed in effect by the account holder, the subscription rights of the Person to whom such rights have been granted will lapse as though such Person failed to return the contemplated order form within the time period specified thereon; provided, however, that the MHC may, but will not be required to, waive any immaterial irregularity on any order form or require the submission of corrected order forms or the remittance of full payment for subscribed shares by such date as the MHC may specify, and all interpretations by the MHC of terms and conditions of this Plan and of the order forms will be final. 6.4. PAYMENT FOR STOCK. 6.4.1 All payments for Holding Company Conversion Stock subscribed for or ordered in the Conversion must be delivered in full to the MHC, together with a properly completed and executed order form, except in the case of the Syndicated Community Offering, on or before the expiration date specified on the order form, unless such date is extended by the MHC; provided, however, that if any Employee Plan subscribes for shares during the Subscription Offering, such plans will not be required to pay for the shares at the time they subscribe but rather may pay for such shares of Holding Company Conversion Stock subscribed for by such plans at the Subscription Price upon consummation of the Conversion, provided, however, that, in the case of the ESOP there is in force from the time of its subscription until the consummation of the Conversion, a loan commitment to lend to the ESOP, at such time, the aggregated Subscription Price of the shares for which it subscribed. The Stock Holding Company or the Bank may make scheduled discretionary contributions to an Employee Plan provided such contributions from the Bank, if any, do not cause the Bank to fail to meet its regulatory capital requirement. Payment for Holding Company Conversion Stock may also be made by a participant in an Employee Plan (including the Bank's 401(k) plan) causing funds held for such participant's benefit by an Employee Plan to be paid over for such purchase to the extent that such plan allows participants or any related trust established for the benefit of such participants to direct that some or all of their individual accounts or sub-accounts be invested in Holding Company Conversion Stock. 6.4.2 Payment for Holding Company Conversion Stock shall be made either by check, bank draft or money order, or if a purchaser has a Deposit Account in the Bank (and if the MHC has elected to permit such withdrawals from the type of Deposit Account maintained by such Person), such purchaser may pay for the shares subscribed for by authorizing the Bank to make a withdrawal from the purchaser's Deposit Account at the Bank in an amount equal to the aggregate purchase price of such shares. No wire transfers will be accepted. Any authorized withdrawal, whether from a savings, passbook or certificate account, shall be without penalty as to premature withdrawal. If the authorized withdrawal is from a certificate account, and the - 14 - remaining balance does not meet the applicable minimum balance requirements, the certificate shall be canceled at the time of withdrawal, without penalty, and the remaining balance will earn interest at the passbook rate. Funds for which a withdrawal is authorized will remain in the purchaser's Deposit Account but may not be used by the purchaser pending consummation of the Conversion or expiration of the 45-day period (or such longer period as may be approved by the Commissioner) following termination of the Subscription Offering, whichever occurs first. After consummation of the Conversion, the withdrawal will be given effect only to the extent necessary to satisfy the subscription (to the extent it can be filled) at the Subscription Price. Interest submitted will continue to be earned on any amounts authorized for withdrawal until such withdrawal is given effect. Interest on checks and money orders will be paid by the Bank at a the Bank's passbook rate. Such interest will be paid from the date payment is received by the Bank until consummation or termination of the Conversion. If for any reason the Conversion is not consummated, all payments made by subscribers in the Conversion will be refunded to them with interest. In case of amounts authorized for withdrawal from Deposit Accounts, refunds will be made by canceling the authorization for withdrawal. ARTICLE 7. STOCK PURCHASE PRIORITIES 7.1. PRIORITIES FOR OFFERING. All purchase priorities established by this Article 7 shall be subject to the purchase limitations set forth in, and shall be subject to adjustment as provided in, Article 8 of this Plan. In addition to the priorities set forth in this Article 7, the MHC may establish other priorities for the purchase of Holding Company Conversion Stock, subject to the approval of the Commissioner and the FRB. The priorities for the purchase of shares in the Conversion are set forth in the following Sections. 7.2. CERTAIN DETERMINATIONS. All interpretations or determinations of whether prospective purchasers are "RESIDENTS," "ASSOCIATES," or "ACTING IN CONCERT", and any other interpretations of any and all other provisions of the Plan shall be made by and at the sole discretion of the MHC, and may be based on whatever evidence the MHC may choose to use in making any such determination. 7.3. MINIMUM PURCHASE; NO FRACTIONAL SHARES. The minimum purchase by any Person shall be 25 shares (to the extent that shares of Holding Company Conversion Stock are available for purchase), provided, however, that the aggregate purchase price for any minimum share purchase shall not exceed $500. No fractional shares will be allocated or issued. 7.4. OVERVIEW OF PRIORITIES. In descending order of priority, the opportunity to purchase Holding Company Conversion Stock shall be given in the Subscription Offering to: (1) Eligible Account Holders; (2) Supplemental Eligible Account Holders; (3) Tax-Qualified Employee Plans; and (4) Employees, Officers, directors and trustees of the MHC and the Bank. Any shares of Holding Company Conversion Stock that are not subscribed for in the Subscription Offering at the discretion of the MHC may be offered for sale in a Direct Community Offering and/or a Syndicated Community Offering on terms and conditions and procedures satisfactory to the MHC. - 15 - 7.5. PRIORITIES FOR SUBSCRIPTION OFFERING. 7.5.1 FIRST PRIORITY: ELIGIBLE ACCOUNT HOLDERS. Upon approval of the Plan by the Corporators and the receipt of permission from the Commissioner and the FRB to offer the Holding Company Conversion Stock for sale, each Eligible Account Holder shall receive, without payment therefor, nontransferable subscription rights on a first priority basis to subscribe for a number of shares of Holding Company Conversion Stock equal to the greatest of (x) a number determined by dividing the Individual Maximum Purchase Limit (as such term is defined in Section 8.2) by the per share Subscription Price, (y) one-tenth of one percent (.10%) of the shares offered in the Conversion, or (z) 15 times the product (rounded down to the nearest whole number) obtained by multiplying (1) the total number of shares of Holding Company Conversion Stock to be issued in the Conversion by (2) a fraction, of which the numerator is the Qualifying Deposit of the Eligible Account Holder and the denominator is the total amount of Qualifying Deposits of all Eligible Account Holders. If there are insufficient shares available to satisfy all subscriptions of Eligible Account Holders, shares will be allocated to Eligible Account Holders so as to permit each such subscribing Eligible Account Holder to purchase a number of shares of Holding Company Conversion Stock sufficient to make his or her total allocation equal to the lesser of 100 shares or the number of shares subscribed for. Thereafter, unallocated shares of Holding Company Conversion Stock will be allocated pro rata to remaining subscribing Eligible Account Holders whose subscriptions remain unfilled in the same proportion that each such subscriber's Qualifying Deposit bears to the total amount of Qualifying Deposits of all subscribing Eligible Account Holders whose subscriptions remain unfilled. Subscription rights to purchase Holding Company Conversion Stock received by corporators, Trustees, Officers, and directors of the MHC and the Bank (and their Associates) based on their increased deposits in the Bank in the one year preceding the Eligibility Record Date shall be subordinated to the subscription rights of other Eligible Account Holders. To ensure proper allocation of stock, each Eligible Account Holder must list on his or her subscription order form all Deposit Accounts in which he had an ownership interest as of the Eligibility Record Date. 7.5.2 SECOND PRIORITY: SUPPLEMENTAL ELIGIBLE ACCOUNT HOLDERS. To the extent there are shares remaining after satisfaction of subscriptions by Eligible Account Holders, each Supplemental Eligible Account Holder shall receive non-transferable subscription rights to subscribe for a number of shares of Holding Company Conversion Stock equal to the greatest of (x) a number determined by dividing the Individual Maximum Purchase Limit by the per share Subscription Price, (y) one-tenth of one percent (.10%) of the shares offered in the Conversion, or (z) 15 times the product (rounded down to the nearest whole number) obtained by multiplying (1) the total number of shares of Holding Company Conversion Stock to be issued in the Conversion by (2) a fraction, of which the numerator is the Qualifying Deposit of the Supplemental Eligible Account Holder and the denominator is the total amount of Qualifying Deposits of all Supplemental Eligible Account Holders. In the event Supplemental Eligible Account Holders subscribe for a number of shares of Holding Company Conversion Stock which, when added to the shares subscribed for by Eligible Account Holders, exceed available shares, the available shares of Holding Company Conversion Stock will be allocated among subscribing Supplemental Eligible Account Holders so as to permit each subscribing Supplemental Eligible Account Holder to purchase a number of shares of Holding Company Conversion Stock sufficient to make his or her total allocation equal to the lesser of 100 shares or the number of shares subscribed for. Thereafter, unallocated shares will be allocated to each subscribing Supplemental Eligible Account Holder whose subscription remains unfilled in the same proportion that such subscriber's Qualifying Deposit on the Supplemental Eligibility - 16 - Record Date bears to the total amount of Qualifying Deposits of all subscribing Supplemental Eligible Account Holders whose subscriptions remain unfilled. 7.5.3 THIRD PRIORITY: TAX-QUALIFIED EMPLOYEE PLANS. To the extent there are shares remaining after satisfaction of subscriptions by Eligible Account Holders and Supplemental Eligible Account Holders, the Tax-Qualified Employee Plans shall be given the opportunity to purchase in the aggregate up to 10% of the Holding Company Conversion Stock issued in the Conversion. In the event that the total number of shares of Holding Company Conversion Stock offered in the Conversion is increased to an amount greater than the Range Maximum, the Tax-Qualified Employee Plans shall have a priority right to purchase any such shares exceeding the Range Maximum (up to the aggregate of 10% of Holding Company Conversion Stock to be issued in the Conversion). If the Tax-Qualified Employee Stock Benefit Plans choose not to fill their orders in the Offering, then the Tax-Qualified Employee Stock Benefit Plans may purchase shares in the open market following consummation of the Conversion. 7.5.4 FOURTH PRIORITY: EMPLOYEES, OFFICERS, DIRECTORS AND TRUSTEES. To the extent there are shares remaining after satisfaction of subscriptions by Eligible Account Holders, Supplemental Eligible Account Holders, and any Tax-Qualified Employee Plans, each Employee, Officer, director and trustee of the MHC or the Bank who is not an Eligible Account Holder or a Supplemental Eligible Account Holder shall receive non-transferable subscription rights to subscribe for shares of Holding Company Conversion Stock offered in the Conversion in an amount equal to the Individual Maximum Purchase Limit; provided, however, that the aggregate number of shares of Holding Company Conversion Stock that may be purchased by Employees, Officers, directors and trustees in the Conversion shall be limited to 30% of the total number of shares of Holding Company Conversion Stock issued in the Conversion (including shares purchased by Employees, Officers, directors and trustees under this Section 7.5.4 and under the preceding priority categories, but not including shares purchased by the ESOP). In the event that Employees, Officers, directors, and trustees subscribe under this Section 7.5.4 for more shares of Holding Company Conversion Stock than are available for purchase by them, the shares of Holding Company Conversion Stock available for purchase will be allocated by the MHC among such subscribing Persons on an equitable basis, such as by giving weight to the period of service, compensation and position of the individual subscriber. 7.6. PRIORITIES FOR DIRECT COMMUNITY OFFERING. 7.6.1 Any shares of Holding Company Conversion Stock not subscribed for in the Subscription Offering may be offered for sale in a Direct Community Offering. This will involve an offering of all unsubscribed shares of Holding Company Conversion Stock directly to the general public. The Direct Community Offering, if any, shall be for a period of not more than 45 days unless extended by the MHC, and shall commence concurrently with, during or promptly after the Subscription Offering. The MHC may use an investment banking firm or firms on a best efforts basis to sell the unsubscribed shares in the Subscription and Direct Community Offering. The MHC may pay a commission or other fee to such investment banking firm or firms as to the shares sold by such firm or firms in the Subscription and Direct Community Offering and may also reimburse such firm or firms for expenses incurred in connection with the sale. The Holding Company Conversion Stock will be offered and sold in the Direct Community Offering, in accordance with the Regulations, so as to achieve the widest - 17 - distribution of the Holding Company Conversion Stock. In making the Direct Community Offering, the Bank will give preference to natural persons residing in the Local Community. Orders accepted in the Direct Community Offering shall be filled up to a maximum not to exceed 2% of the Holding Company Conversion Stock, and thereafter remaining shares shall be allocated on an equal number of shares basis per order until all orders have been filled. No Person may subscribe for or purchase more than the Individual Maximum Purchase Limit of Holding Company Conversion Stock in the Direct Community Offering. The MHC, in its sole discretion, may reject subscriptions, in whole or in part, received from any Person under this Section 7.6. 7.6.2 In the event of an oversubscription for shares in the Direct Community Offering, available shares will be allocated (to the extent shares remain available) first to cover orders of natural Persons residing in the Local Community, so that each such Person may receive 100 shares, and thereafter, on a pro rata basis to such Persons based on the amount of their respective subscriptions or on such other reasonable basis as may be determined by the MHC. If oversubscription does not occur among natural Persons residing in the Local Community, the allocation process to cover orders of other Person subscribing for shares in the Direct Community Offering shall be as described above for natural Persons. 7.6.3 The terms "RESIDENCE," "RESIDE," or "RESIDING" as used herein with respect to any Person shall mean any Person who occupies a dwelling within the Local Community, has an intent to remain with the Local Community for a period of time, and manifests the genuineness of that intent by establishing an ongoing physical presence within the Local Community together with an indication that such presence within the Local Community is not merely transitory in nature. To the extent the Person is a corporation or other business entity, the principal place of business or headquarters must be in the Local Community. The Bank may use deposit or loan records or such other evidence provided to it to determine whether a Person is a resident. In all cases, however, such a determination shall be in the sole discretion of the MHC. 7.6.4 If: (i) aggregate subscriptions totaling at least the minimum of the Estimated Valuation Range (the "RANGE MINIMUM") are not received in the Subscription Offering and Direct Community Offering, and the MHC, in its sole discretion, determines that a Syndicated Community Offering is not in the best interests of the MHC; or (ii) aggregate subscriptions and orders totaling at least the Range Minimum are not received in the Subscription Offering, Direct Community Offering and the Syndicated Community Offering; then the MHC may, in its sole discretion, apply unsubscribed/unordered Holding Company Conversion Stock toward the stock consideration to be issued to Chart stockholders in exchange for their shares of Chart Bank, or in any other manner that facilitates the completion of the Chart Acquisition, provided that the total Merger Shares, including Merger Shares issued pursuant to this Section 7.6.4, represent no more than 49% of the outstanding Holding Company Common Stock immediately after the closing of the Conversion and Chart Acquisition. Holding Company Conversion Stock may only be issued as Merger Shares in order to achieve the Range Minimum. - 18 - 7.7. PRIORITIES FOR SYNDICATED COMMUNITY OFFERING. 7.7.1 Any shares of Holding Company Conversion Stock not sold in the Subscription Offering or in the Direct Community Offering, if any, may be offered for sale to the general public by a selling group of broker-dealers in a Syndicated Community Offering, subject to terms, conditions and procedures as may be determined by the MHC in a manner that is intended to achieve the widest distribution of the Holding Company Conversion Stock subject to the rights of the MHC to accept or reject in whole or in part all orders in the Syndicated Community Offering. No Person may purchase in the Syndicated Community Offering more than the Individual Maximum Purchase Limit of Holding Company Conversion Stock. It is expected that the Syndicated Community Offering will commence as soon as practicable after termination of the Direct Community Offering, if any. The Syndicated Community Offering shall be completed within 45 days after the termination of the Subscription Offering, unless such period is extended as provided herein. The commission in the Syndicated Community Offering shall be determined by a marketing agreement between the MHC and the Marketing Agent. Such agreement shall be filed with the FRB, the Division and the SEC. 7.7.2 If for any reason a Syndicated Community Offering of unsubscribed shares of Holding Company Conversion Stock cannot be effected or is not deemed to be advisable, and any shares remain unsold after the Subscription Offering and the Community Offering, if any, the MHC may seek to make other arrangements for the sale of the remaining shares in order to meet the Range Minimum, including an underwritten public offering. Such other arrangements will be subject to the approval of the Commissioner and the FRB and to compliance with applicable state and federal securities laws. ARTICLE 8. ADDITIONAL LIMITATIONS ON PURCHASES 8.1. GENERAL. Purchases of Holding Company Conversion Stock in the Conversion will be subject to the purchase limitations set forth in this Article 8: 8.2. INDIVIDUAL MAXIMUM PURCHASE LIMIT. This Section 8.2 sets forth the "INDIVIDUAL MAXIMUM PURCHASE LIMIT." No Person (or Persons exercising subscription rights through a single qualifying deposit account held jointly) may purchase in the Offering (including the Subscription Offering, the Direct Community Offering and the Syndicated Community Offering) more than $150,000 of Holding Company Conversion Stock, except that: (i) the MHC may, in its sole discretion and without further notice to or solicitation of subscribers or other prospective purchasers, (x) increase such Individual Maximum Purchase Limit to up to 5% of the number of shares of Holding Company Conversion Stock offered in the Conversion or (y) decrease such Individual Maximum Purchase Limit to no less than one-tenth of one percent (.10%) of the number of shares of Holding Company Conversion Stock offered in the Conversion; and (ii) Tax-Qualified Employee Plans may purchase up to 10% of the shares issued in the Conversion. If the MHC increases the Individual Maximum Purchase Limit (as permitted by this Section 8.2), subscribers in the Subscription Offering who ordered the previously-effective maximum amount will be, and certain other large subscribers in the sole discretion of the MHC may be, given the opportunity to increase their subscriptions up to the then applicable limit. Requests to purchase additional shares of Holding Company Conversion Stock under this - 19 - provision will be determined by the MHC, in its sole discretion. 8.3. GROUP ACTING IN CONCERT. This Section 8.3 sets forth the "GROUP MAXIMUM PURCHASE LIMIT." No Person and his or her Associates or group of Persons Acting in Concert, may purchase in the Offering (including the Subscription Offering, the Direct Community Offering and the Syndicated Community Offering) more than $250,000 of Holding Company Conversion Stock, except that: (i) the MHC may, in its sole discretion and without further notice to or solicitation of subscribers or other prospective purchasers, (x) increase such Group Maximum Purchase Limit to up to 5% of the number of shares of Holding Company Conversion Stock offered in the Conversion or (y) decrease such Group Maximum Purchase Limit to no less than one-tenth of one percent (.10%) of the number of shares of Holding Company Conversion Stock offered in the Conversion; and (ii) Tax-Qualified Employee Plans may purchase up to 10% of the shares issued in the Conversion. Notwithstanding the foregoing, in the event that the MHC increases the Individual Maximum Purchase Limit (as permitted by Section 8.2) to a number that is in excess of the Group Maximum Purchase Limit established by this Section 8.3, the Group Maximum Purchase Limit shall automatically be increased so as to be equal to the Individual Maximum Purchase Limit, as adjusted. 8.4. PURCHASES BY OFFICERS, DIRECTORS, TRUSTEES AND CORPORATORS. The aggregate number of shares of Holding Company Conversion Stock to be purchased in the Offering by Officers, Directors, Trustees and Corporators of the MHC and the Bank (and their Associates) shall not exceed 30% of the total number of shares of Holding Company Conversion Stock issued in the Conversion. 8.5. SPECIAL RULE FOR TAX-QUALIFIED EMPLOYEE PLANS. Shares of Holding Company Conversion Stock purchased by any individual participant ("PLAN PARTICIPANT") in a Tax-Qualified Employee Plan using funds therein pursuant to the exercise of subscription rights granted to such Participant in his individual capacity as an Eligible Account Holder or Supplemental Eligible Account Holder shall not be deemed to be purchases by a Tax-Qualified Employee Plan for purposes of calculating the maximum amount of Holding Company Conversion Stock that Tax-Qualified Employee Plans may purchase pursuant to this Plan, if the individual Plan Participant controls or directs the investment authority with respect to such account or subaccount. 8.6. INCREASE IN THE TOTAL NUMBER OF SHARES OFFERED. In the event that (i) the total number of shares of Holding Company Conversion Stock offered in the Conversion is increased to an amount greater than the Range Maximum, and (ii) there shall be additional shares of Holding Company Conversion Stock available after the Tax-Qualified Employee Plans shall have exercised their priority right (established pursuant to Section 7.5.3) to purchase shares exceeding the Range Maximum, any additional shares not purchased by the Tax-Qualified Employee Plans will be issued to fill unfulfilled subscriptions of other subscribers according to their respective priorities set forth in the Plan. 8.7. ILLEGAL PURCHASES. Notwithstanding any other provision of the Plan, no Person shall be entitled to purchase any Holding Company Conversion Stock to the extent such purchase would be illegal under any federal law or state law or regulation or would violate regulations or policies of the National Association of Securities Dealers, Inc., particularly those regarding free - 20 - riding and withholding. The MHC and/or its agents may ask for an acceptable legal opinion from any purchaser as to the legality of such purchase and may refuse to honor any purchase order if such opinion is not timely furnished. 8.8. REJECTION OF ORDERS. The MHC has the right in its sole discretion to reject any order submitted by a Person whose representations the MHC believes to be false or who it otherwise believes, either alone or Acting in Concert with others, is violating, circumventing, or intends to violate, evade or circumvent the terms and conditions of the Plan. 8.9. SUBSCRIBERS IN NON-QUALIFIED STATES OR IN FOREIGN COUNTRIES. The MHC, in its sole discretion, may make reasonable efforts to comply with the securities laws of any state in the United States in which its depositors reside, and will only offer and sell the Holding Company Conversion Stock in states in which the offers and sales comply with such states' securities laws. However, no Person will be offered or allowed to purchase any Holding Company Conversion Stock under the Plan if he or she resides in a foreign country or in a state of the United States with respect to which any of the following apply: (i) a small number of Persons otherwise eligible to purchase shares under the Plan reside in such state or foreign county; (ii) the offer or sale of shares of Holding Company Conversion Stock to such Persons would require the Stock Holding Company or its Employees to register, under the securities laws of such state or foreign country, as a broker or dealer or to register or otherwise qualify its securities for sale in such state or foreign country; or (iii) such registration or qualification would be impracticable for reasons of cost or otherwise. 8.10. NO OFFER TO TRANSFER SHARES. Before the consummation of the Conversion, no Person shall offer to transfer, or enter into any agreement or understanding to transfer the legal or beneficial ownership of any subscription rights or shares of Holding Company Conversion Stock, except pursuant to the Plan. The following shall not constitute impermissible transfers under this Plan. Any Person having subscription rights in his individual capacity as an Eligible Account Holder or Supplemental Eligible Account Holder may exercise such subscription rights by causing a tax-qualified plan to make such purchase using funds allocated to such Person in such tax-qualified plan if such individual plan participant controls or directs the investment authority with respect to such account or subaccount. A tax-qualified plan that maintains an Eligible Deposit Account in the Bank as trustee for or for the benefit of a Person who controls or directs the investment authority with respect to such account or subaccount ("BENEFICIARY") may, in exercising its subscription rights, direct that the Holding Company Conversion Stock be issued in the name of such individual Beneficiary in his individual capacity. 8.11. CONFIRMATION BY PURCHASERS. Each Person ordering Holding Company Conversion Stock in the Conversion will be deemed to confirm that such purchase does not conflict with the purchase limitations in the Plan. All questions concerning whether any Persons are Associates or a Group Acting in Concert or whether any purchase conflicts with the purchase limitations in the Plan or otherwise violates any provision of the Plan shall be determined by the MHC in its sole discretion. Such determination shall be conclusive, final and binding on all Persons and the MHC may take any remedial action, including without limitation rejecting the purchase or referring the matter to the Commissioner for action, as in its sole discretion the MHC may deem appropriate. - 21 - ARTICLE 9. POST OFFERING MATTERS 9.1. STOCK PURCHASES AFTER THE CONVERSION. For a period of three years after the proposed Conversion, no Officer or director of the Stock Holding Company or the Bank, or his or her Associates, may purchase, without the prior written approval of the Commissioner, any Holding Company Common Stock: (i) from the Stock Holding Company, or (ii) except from a broker-dealer registered with the SEC, provided that the foregoing shall not apply to (x) negotiated transactions involving more than 1% of the outstanding Holding Company Common Stock, or (y) purchases of stock made by and held by or otherwise made pursuant to any Tax-Qualified or Non-Tax-Qualified Employee Plan of the Bank or the Stock Holding Company even if such stock is attributable to Officers, directors or their Associates. 9.2. RESALES OF STOCK BY MANAGEMENT PERSONS. Holding Company Conversion Stock purchased in the Conversion by Officers, directors, trustees and Corporators of the Bank, the Stock Holding Company and the MHC may not be resold for a period of at least one year following the date of purchase, except in the case of death or substantial disability, as determined by the Commissioner, of such person, or upon the written approval of the Commissioner. 9.3. STOCK CERTIFICATES. Each stock certificate shall bear a legend giving appropriate notice of the restrictions set forth in Section 9.2. Appropriate instructions shall be issued to the Stock Holding Company's transfer agent with respect to applicable restrictions on transfers of such stock. Any shares of stock issued as a stock dividend, stock split or otherwise with respect to such restricted stock, shall be subject to the same restrictions as apply to the restricted stock. 9.4. RESTRICTION ON FINANCING STOCK PURCHASES. The Stock Holding Company will not offer or sell any of the Holding Company Common Stock proposed to be issued to any Person whose purchase would be financed by funds loaned, directly or indirectly, to the Person by the Stock Holding Company, Bank or any of their Affiliates. 9.5. STOCK BENEFIT PLANS. The Board of Directors of the Bank and/or the Stock Holding Company are permitted under the Regulations, and may decide, to adopt one or more stock benefit plans for the benefit of the Employees, Officers and directors of the Bank and Stock Holding Company, including an ESOP, an Employer Stock Fund option in the 401(k) plan, stock award plans and stock option plans, which will be authorized to purchase Holding Company Common Stock and grant options for Holding Company Common Stock. However, only the Tax-Qualified Employee Plans will be permitted to purchase Holding Company Conversion Stock in the Conversion subject to the purchase priorities set forth in the Plan. Pursuant to the Regulations, the Stock Holding Company may authorize the ESOP and any other Tax-Qualified Employee Plans to purchase in the aggregate up to 10% of the Holding Company Conversion Stock to be issued. The Bank or the Stock Holding Company may make scheduled discretionary contributions to one or more Tax-Qualified Employee Plans to purchase Holding Company Common Stock or to purchase issued and outstanding shares of Holding Company Common - 22 - Stock or authorized but unissued shares of Holding Company Common Stock subsequent to the completion of the Conversion, provided, however, that such contributions do not cause the Bank to fail to meet any of its regulatory capital requirements. The Plan specifically authorizes the grant and issuance by the Stock Holding Company of (i) awards of Holding Company Common Stock after the Conversion pursuant to one or more stock recognition and award plans (the "RECOGNITION PLANS") in an amount equal to up to 4% of the number of shares of Holding Company Conversion Stock issued in the Conversion, (ii) options to purchase a number of shares of Holding Company Common Stock in an amount equal to up to 10% of the number of shares of Holding Company Conversion Stock issued in the Conversion, and shares of Holding Company Common Stock issuable upon exercise of such options, and (iii) Holding Company Common Stock to one or more Tax Qualified Employee Plans, including the ESOP, at the closing of the Conversion or at any time thereafter, in an amount equal to up to 10% of the number of shares of Holding Company Conversion Stock issued in the Conversion. Shares awarded to the Tax Qualified Employee Plans or pursuant to the Recognition Plans, and shares issued upon exercise of options may be authorized but unissued shares of the Stock Holding Company's Holding Company Common Stock, or shares of Holding Company Common Stock purchased by the Stock Holding Company or such plans in the open market. No Recognition Plans or stock option plans have yet been adopted by the Board of the Holding Company, and no such plans will be submitted for the approval of the Stock Holding Company's stockholders at a meeting held earlier than six months after completion of the Conversion. 9.6. MARKET FOR HOLDING COMPANY COMMON STOCK. If at the close of the Conversion the Stock Holding Company has more than 300 shareholders of any class of stock, the Stock Holding Company shall use its best efforts to: 9.6.1 Encourage and assist a Market Maker to establish and maintain a market for that class of stock; and 9.6.2 List that class of stock on a national or regional securities exchange, or on the Nasdaq system. 9.6.3 Register the Holding Company Common Stock with the SEC pursuant to the Exchange Act, and undertake not to deregister such Holding Company Common Stock for a period of three years thereafter. 9.7. LIQUIDATION ACCOUNT. 9.7.1 The MHC shall, at the time of the Conversion, establish a Liquidation Account in an amount equal to the net worth of the MHC as set forth in the latest consolidated statement of financial condition contained in the final Prospectus distributed in connection with the Conversion. The function of the Liquidation Account is to establish a priority on liquidation and, except as otherwise provided in this Section 9.7, the existence of the Liquidation Account shall not operate to restrict the use or application of any of the net worth accounts of the Stock Holding Company. The Liquidation Account will be maintained by the MHC for the benefit of the Eligible Account Holders and Supplemental Eligible Account Holders who continue to maintain Deposit Accounts with the Bank following the Conversion. Each Eligible Account Holder and Supplemental Eligible Account Holder shall, with respect to each Deposit Account, - 23 - hold a related inchoate interest in a portion of the Liquidation Account balance, in relation to each Deposit Account balance at the Eligibility Record Date or Supplemental Eligibility Record Date, as the case may be, or to such balance as it may be subsequently reduced, as hereinafter provided. The initial Liquidation Account balance shall not be increased, and shall be subject to downward adjustment to the extent of any downward adjustment of any subaccount balance of any Eligible Account Holder or Supplemental Eligible Account Holder in accordance with 209 CMR 33.05(12). 9.7.2 In the unlikely event of a complete liquidation of the Stock Holding Company (and only in such event), following all liquidation payments to creditors (including those to depositors to the extent of their Deposit Accounts) each Eligible Account Holder and Supplemental Eligible Account Holder shall be entitled to receive a liquidating distribution from the Liquidation Account, in the amount of the then-adjusted subaccount balances for his or her deposit accounts then held, before any liquidating distribution may be made to any holders of the Stock Holding Company's capital stock. No merger, consolidation, reorganization, or purchase of bulk assets with assumption of deposit accounts and other liabilities, or similar transactions with an FDIC-insured institution, in which the Stock Holding Company is not the surviving institution, shall be deemed to be a complete liquidation for this purpose. In such transactions, the Liquidation Account shall be assumed by the surviving institution. 9.7.3 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 the Liquidation Account by a fraction, the numerator of which is the amount of such Eligible Account Holder's or Supplemental Eligible Account Holder's Qualifying Deposit and the denominator of which is the total amount of all Qualifying Deposits of all Eligible Account Holders and Supplemental Eligible Account Holders in the Bank. For Deposit Accounts in existence on 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, but shall be subject to downward adjustment as described below. 9.7.4 If, at the close of business on the last day of any period for which the Stock Holding Company has prepared audited financial statements subsequent to the effective date of the Conversion, the deposit balance in the Deposit Account of an Eligible Account Holder or Supplemental Eligible Account Holder is less than the lesser of: (i) the balance in the Deposit Account at the close of business on the last day of any period for which the Stock Holding Company has prepared audited financial statements subsequent to the Eligibility Record Date or Supplemental Eligibility Record Date, or (ii) the amount in such Deposit Account 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 proportionate to the reduction in the balance of such Deposit Account. In the event of such downward adjustment, the subaccount balance shall not be subsequently increased, notwithstanding any subsequent increase in the deposit balance of the related Deposit Account. If any such Deposit Account is closed, the related subaccount shall be reduced to zero. For purposes of this Section 9.7, a time account shall be deemed to be closed upon its maturity date regardless of any renewal thereof. A distribution of each subaccount balance may be made only in the event of a complete liquidation of the Stock Holding Company subsequent to the - 24 - Conversion and only out of funds available for such purpose after payment of all creditors. 9.7.5 The Stock Holding Company shall not be required to set aside funds for the purpose of establishing the Liquidation Account, and the creation and maintenance of the Liquidation Account shall not operate to restrict the use or application of any of the net worth accounts of the Stock Holding Company, except that the Stock Holding Company shall not declare or pay a cash dividend on, or repurchase any of, its capital stock if the effect thereof would cause its net worth to be reduced below the amount required for the Liquidation Account. 9.8. PAYMENT OF DIVIDENDS. The Stock Holding Company may not declare or pay a cash dividend on the Holding Company Common Stock if the effect thereof would cause its regulatory capital to be reduced below the amount required to maintain the Liquidation Account and under FDIC rules and regulations. Otherwise, the Stock Holding Company may declare dividends in accordance with applicable laws and regulations. 9.9. REPURCHASE OF STOCK. The Stock Holding Company has no present intention of repurchasing any of the Holding Company Common Stock. However, based upon facts and circumstances following the Conversion and subject to applicable regulatory and accounting requirements, the Board of Directors of the Stock Holding Company may determine to repurchase stock in the future. Such facts and circumstances may include but not be limited to: (i) market and economic factors such as the price at which the Holding Company Common Stock is trading in the market, the volume of trading, the attractiveness of other investment alternatives in terms of the rate of return and risk involved in the investment, the ability to increase the book value and/or earnings per share of the remaining outstanding shares, and the opportunity to improve the Stock Holding Company's return on equity; (ii) the avoidance of dilution to stockholders by not having to issue additional shares to cover the exercise of stock options or the purchase of shares by the ESOP in the event the ESOP is unable to acquire shares in the Subscription Offering, or to fund the any stock plans adopted after the consummation of the Conversion; and (iii) any other circumstances in which repurchases would be in the best interests of the Stock Holding Company and its shareholders. 9.10. CONVERSION EXPENSES. The Regulations require that the expenses of the Conversion must be reasonable. The MHC will use its best efforts to assure that the expenses incurred by the MHC in effecting the Conversion will be reasonable. 9.11. PUBLIC INSPECTION OF CONVERSION APPLICATION. The MHC will maintain a copy of the Application in the main banking office of the Bank and such copy will be available for public inspection. 9.12. ENFORCEMENT OF TERMS AND CONDITIONS. The MHC shall have the right to take all such action as it, in its sole discretion, may deem necessary, appropriate or advisable in order to monitor and enforce the terms, conditions, limitations and restrictions contained in the Plan and the terms, conditions and representations contained in the Order Forms, including, but not limited to, the right to require any subscriber or purchaser to provide evidence, in a form satisfactory to the MHC, of such Person's eligibility to subscribe for or purchase shares of the Holding Company Conversion Stock under the terms of the Plan and the absolute right (subject only to any necessary regulatory approvals or concurrence) to reject, limit or revoke acceptance - 25 - of any subscription or order and to delay, terminate or refuse to consummate any sale of Holding Company Conversion Stock that it believes might violate, or is designed to, or is any part of a plan to, evade or circumvent such terms, conditions, limitations, restrictions and representations. Any such action shall be final, conclusive and binding on all Persons, and the MHC, the Bank and their Board of Trustees, Board of Directors, Officers, Employees and agents shall be free from any liability to any Person on account of any such action. 9.13. VOTING RIGHTS IN CONVERTED BANK. Following the Conversion, the holders of the capital stock of the Stock Holding Company shall have exclusive voting rights in the Stock Holding Company. ARTICLE 10. MISCELLANEOUS 10.1. INTERPRETATION OF PLAN. All interpretations of the Plan and application of its provisions to particular circumstances by the MHC shall be final, subject to the authority of the Commissioner. When a reference is made in this Agreement to Sections or Exhibits, such reference shall be to a Section of or Exhibit to the Plan unless otherwise indicated. The recitals hereto constitute an integral part of the Plan. References to Sections include subsections, which are part of the related Section (e.g., a section numbered "Section 5.5.1" would be part of "Section 5.5" and references to "Section 5.5" would also refer to material contained in the subsection described as "Section 5.5.1"). The table of contents and headings contained in the Plan are for reference purposes only and shall not affect in any way the meaning or interpretation of the Plan. Whenever the words "include", "includes" or "including" are used in the Plan, they shall be deemed to be followed by the words "without limitation". 10.2. AMENDMENT OR TERMINATION OF THE PLAN. If deemed necessary or desirable, the terms of the Plan may be substantively amended by a majority vote of the members of the Board of Trustees as a result of comments from regulatory authorities at any time prior to approval of the Plan by the Commissioner and at any time thereafter with the concurrence of the Commissioner. If amendments to the Plan are made after the Special Meeting, no further approval of the Corporators will be necessary unless otherwise required by the Commissioner. The Plan may be terminated by the Board of Trustees in its sole discretion, by reason of the termination of the Acquisition Agreement or otherwise, at any time prior to the Special Meeting and at any time thereafter with the concurrence of the Commissioner. The Plan will terminate if the sale of all shares of Holding Company Conversion Stock is not completed within twenty four months from the date of approval of the Plan by the Board of Trustees. Dated: - 26 - EXHIBIT 3.4 PROPOSED CHARTER AND BYLAWS OF THE STOCK HOLDING COMPANY [Intentionally Omitted] - 27 - EXHIBIT 3.5 PROPOSED AMENDED AND RESTATED CHARTER AND BYLAWS OF THE BANK [Intentionally Omitted] - 28 - EXHIBIT 3.7 INITIAL MEMBERS OF THE BOARD OF DIRECTORS OF THE STOCK HOLDING COMPANY
NAME TERM EXPIRES - ---- ------------ Dr. Mary Ambler 2008 Mr. William P. Bissonnette 2006 Dr. William F. Brady 2007 Mr. John C. Fuller 2007 Ms. Anne M. King 2006 Mr. Richard D. Mann 2007 Mr. John D. Murphy 2006 Mr. Charles F. Oteri 2008 Mr. Thomas R. Venables 2008 Mr. Alfred H. Wahlers 2007 Mr. Charles Yergatian 2006
- 29 - EX-2.2 4 b52576bfexv2w2.txt EX-2.2 AGREEMENT & PLAN OF MERGER AMONG BENJAMIN FRANKLIN BANCORP, M.H.C., BENJAMIN FRANKLIN SAVINGS BANK AND CHART BANK EXHIBIT 2.2 - -------------------------------------------------------------------------------- AGREEMENT AND PLAN OF MERGER DATED AS OF SEPTEMBER 1, 2004 AMONG BENJAMIN FRANKLIN BANCORP, M.H.C., BENJAMIN FRANKLIN SAVINGS BANK AND CHART BANK, A COOPERATIVE BANK - -------------------------------------------------------------------------------- TABLE OF CONTENTS
Page ---- ARTICLE I. DEFINITIONS; DISCLOSURE............................................................................... 2 1.1. CERTAIN DEFINITIONS...................................................................................... 2 1.2. OTHER DEFINITIONAL MATTERS............................................................................... 9 1.3. DISCLOSURE SCHEDULES..................................................................................... 9 ARTICLE II. THE MERGER........................................................................................... 9 2.1. THE MERGER............................................................................................... 9 2.2. SURVIVING BANK........................................................................................... 9 2.3. BANCORP.................................................................................................. 10 2.4. EFFECT OF THE MERGER..................................................................................... 11 2.5. ADDITIONAL ACTIONS....................................................................................... 11 2.6. EFFECTIVE DATE AND EFFECTIVE TIME; CLOSING............................................................... 11 ARTICLE III. CONSIDERATION; EXCHANGE PROCEDURES.................................................................. 12 3.1. CONVERSION OF SHARES..................................................................................... 12 3.2. ELECTION PROCEDURES...................................................................................... 13 3.3. EXCHANGE PROCEDURES...................................................................................... 15 3.4. RIGHTS AS SHAREHOLDERS; STOCK TRANSFERS.................................................................. 17 3.5. NO FRACTIONAL SHARES..................................................................................... 17 3.6. DISSENTING SHARES........................................................................................ 18 3.7. ANTIDILUTION PROVISIONS................................................................................. 18 3.8. WITHHOLDING RIGHTS....................................................................................... 18 3.9. CHART OPTIONS............................................................................................ 18 ARTICLE IV. ACTIONS PENDING MERGER............................................................................... 19 4.1. AGREEMENTS OF CHART...................................................................................... 19 4.2. PARACHUTE PAYMENTS....................................................................................... 23 4.3. AGREEMENTS OF BANCORP.................................................................................... 23 ARTICLE V. REPRESENTATIONS AND WARRANTIES OF CHART............................................................... 24 5.1. ORGANIZATION, STANDING AND AUTHORITY..................................................................... 24 5.2. CHART CAPITAL STOCK...................................................................................... 24 5.3. SUBSIDIARIES............................................................................................. 25 5.4. CORPORATE POWER.......................................................................................... 26 5.5. CORPORATE AUTHORITY...................................................................................... 26 5.6. REGULATORY APPROVALS; NO DEFAULTS........................................................................ 26 5.7. CHART FINANCIAL STATEMENTS............................................................................... 27 5.8. CHART REPORTS............................................................................................ 28 5.9. ABSENCE OF UNDISCLOSED LIABILITIES....................................................................... 29 5.10. ABSENCE OF CERTAIN CHANGES OR EVENTS.................................................................... 29 5.11. LITIGATION.............................................................................................. 30 5.12. REGULATORY MATTERS...................................................................................... 30
- i - 5.13. COMPLIANCE WITH LAWS.................................................................................... 31 5.14. MATERIAL CONTRACTS; DEFAULTS............................................................................ 31 5.15. NO BROKERS.............................................................................................. 33 5.16. EMPLOYEE BENEFIT PLANS.................................................................................. 33 5.17. LABOR MATTERS........................................................................................... 35 5.18. ENVIRONMENTAL MATTERS................................................................................... 35 5.19. TAX MATTERS............................................................................................. 36 5.20. RISK MANAGEMENT INSTRUMENTS............................................................................. 37 5.21. INVESTMENT SECURITIES................................................................................... 38 5.22. LOANS; NONPERFORMING AND CLASSIFIED ASSETS.............................................................. 38 5.23. BANK OWNED LIFE INSURANCE............................................................................... 39 5.24. PROPERTIES.............................................................................................. 39 5.25. INTELLECTUAL PROPERTY................................................................................... 39 5.26. FIDUCIARY ACCOUNTS...................................................................................... 40 5.27. CAPITALIZATION.......................................................................................... 40 5.28. COMMUNITY REINVESTMENT ACT, ANTI-MONEY LAUNDERING AND CUSTOMER INFORMATION SECURITY.................... 40 5.29. BOOKS AND RECORDS....................................................................................... 40 5.30. INSURANCE............................................................................................... 40 5.31. ALLOWANCE FOR LOAN LOSSES............................................................................... 41 5.32. CREDIT CARD ACCOUNTS.................................................................................... 41 5.33. MERCHANT PROCESSING..................................................................................... 41 5.34. TRANSACTIONS WITH AFFILIATES............................................................................ 41 5.35. MATERIAL INTERESTS OF CERTAIN PERSONS................................................................... 41 5.36. REQUIRED VOTE; ANTITAKEOVER PROVISIONS.................................................................. 41 5.37. FAIRNESS OPINION........................................................................................ 42 5.38. DISCLOSURE.............................................................................................. 42 ARTICLE VI. REPRESENTATIONS AND WARRANTIES OF BANCORP............................................................ 42 6.1. ORGANIZATION, STANDING AND AUTHORITY..................................................................... 42 6.2. CAPITAL STRUCTURE........................................................................................ 42 6.3. SUBSIDIARIES............................................................................................. 42 6.4. CORPORATE POWER.......................................................................................... 44 6.5. CORPORATE AUTHORITY...................................................................................... 44 6.6. REGULATORY APPROVALS; NO DEFAULTS........................................................................ 44 6.7. BANCORP FINANCIAL STATEMENTS............................................................................. 45 6.8. BANCORP REPORTS.......................................................................................... 46 6.9. ABSENCE OF UNDISCLOSED LIABILITIES....................................................................... 46 6.10. NO MATERIAL ADVERSE EFFECT.............................................................................. 46 6.11. LITIGATION.............................................................................................. 47 6.12. REGULATORY MATTERS...................................................................................... 47 6.13. COMPLIANCE WITH LAWS.................................................................................... 47 6.14. MATERIAL CONTRACTS; DEFAULTS............................................................................ 48 6.15. NO BROKERS.............................................................................................. 48 6.16. EMPLOYEE BENEFIT PLANS.................................................................................. 48 6.17. LABOR MATTERS........................................................................................... 50 6.18. ENVIRONMENTAL MATTERS................................................................................... 50
- ii - 6.19. TAX MATTERS............................................................................................. 51 6.20. RISK MANAGEMENT INSTRUMENTS............................................................................. 53 6.21. INVESTMENT SECURITIES................................................................................... 53 6.22. LOANS; NONPERFORMING AND CLASSIFIED ASSETS.............................................................. 53 6.23. BANK OWNED LIFE INSURANCE............................................................................... 54 6.24. PROPERTIES.............................................................................................. 54 6.25. INTELLECTUAL PROPERTY................................................................................... 55 6.26. FIDUCIARY ACCOUNTS...................................................................................... 55 6.27. CAPITALIZATION.......................................................................................... 55 6.28. COMMUNITY REINVESTMENT ACT, ANTI-MONEY LAUNDERING AND CUSTOMER INFORMATION SECURITY..................... 55 6.29. BOOKS AND RECORDS....................................................................................... 56 6.30. INSURANCE............................................................................................... 56 6.31. ALLOWANCE FOR LOAN LOSSES............................................................................... 56 6.32. CREDIT CARD ACCOUNTS.................................................................................... 56 6.33. MERCHANT PROCESSING..................................................................................... 56 6.34. TRANSACTIONS WITH AFFILIATES............................................................................ 56 6.35. OWNERSHIP OF CHART COMMON STOCK......................................................................... 57 6.36. DISCLOSURE.............................................................................................. 57 ARTICLE VII. COVENANTS........................................................................................... 57 7.1. REASONABLE BEST EFFORTS.................................................................................. 57 7.2. BANCORP CONVERSION FROM MUTUAL TO STOCK FORM............................................................. 57 7.3. REGISTRATION STATEMENTS.................................................................................. 58 7.4. SHAREHOLDER APPROVAL..................................................................................... 59 7.5. REGULATORY FILINGS....................................................................................... 59 7.6. PRESS RELEASES........................................................................................... 60 7.7. ACCESS; INFORMATION...................................................................................... 60 7.8. AFFILIATES............................................................................................... 61 7.9. ACQUISITION PROPOSAL..................................................................................... 61 7.10. CERTAIN POLICIES........................................................................................ 62 7.11. NASDAQ LISTING.......................................................................................... 63 7.12. INDEMNIFICATION......................................................................................... 63 7.13. EMPLOYMENT AND BENEFIT MATTERS.......................................................................... 64 7.14. PAYMENTS AND RELATED AGREEMENTS......................................................................... 66 7.15. NOTIFICATION OF CERTAIN MATTERS......................................................................... 66 7.16. UPDATE OF DISCLOSURE SCHEDULES.......................................................................... 66 7.17. CURRENT INFORMATION..................................................................................... 67 7.18. LOAN LOSS RESERVES...................................................................................... 67 7.19. CONTROL OF OTHER PARTY'S BUSINESS....................................................................... 67 7.20. BANCORP PRODUCTS AND SERVICES........................................................................... 67 7.21. ALCO MANAGEMENT......................................................................................... 67 7.22. TAX MATTERS............................................................................................. 68 7.23. SECTION 16.............................................................................................. 68 ARTICLE VIII. CONDITIONS TO CONSUMMATION OF THE MERGER........................................................... 68 8.1. CONDITIONS TO EACH PARTY'S OBLIGATIONS TO EFFECT THE MERGER.............................................. 68
- iii - 8.2. CONDITIONS TO OBLIGATIONS OF CHART....................................................................... 69 8.3. CONDITIONS TO OBLIGATIONS OF BANCORP..................................................................... 70 ARTICLE IX. TERMINATION.......................................................................................... 71 9.1. TERMINATION.............................................................................................. 71 9.2. EFFECT OF TERMINATION; EXPENSES.......................................................................... 73 9.3. BANCORP SPECIAL PAYMENT.................................................................................. 74 9.4. CHART SPECIAL PAYMENT.................................................................................... 75 ARTICLE X. MISCELLANEOUS......................................................................................... 77 10.1. SURVIVAL................................................................................................ 77 10.2. WAIVER; AMENDMENT....................................................................................... 77 10.3. COUNTERPARTS AND FACSIMILE SIGNATURES................................................................... 77 10.4. GOVERNING LAW........................................................................................... 77 10.5. EXPENSES................................................................................................ 77 10.6. NOTICES................................................................................................. 77 10.7. ENTIRE UNDERSTANDING; NO THIRD PARTY BENEFICIARIES...................................................... 78 10.8. SEVERABILITY............................................................................................ 78 10.9. ENFORCEMENT OF THE AGREEMENT............................................................................ 79 10.10. INTERPRETATION......................................................................................... 79 10.11. ASSIGNMENT............................................................................................. 79 10.12. ALTERNATIVE STRUCTURE.................................................................................. 79
- iv - AGREEMENT AND PLAN OF MERGER AGREEMENT AND PLAN OF MERGER, dated as of September 1, 2004 (this "AGREEMENT"), by and among Benjamin Franklin Bancorp, M.H.C. ("BANCORP"), Benjamin Franklin Savings Bank ("BANCORP BANK") and Chart Bank, A Cooperative Bank ("CHART"). Capitalized terms used but not defined in the Recitals to this Agreement shall have the meanings defined in Section 1.1. RECITALS WHEREAS, Chart is a Massachusetts chartered co-operative bank in stock form, having its principal place of business in Waltham, Massachusetts; WHEREAS, Bancorp is a Massachusetts chartered mutual holding company, having its principal place of business in Franklin, Massachusetts; WHEREAS, the Boards of Bancorp, Bancorp Bank and Chart have each determined that it is advisable and in the best interests of their respective companies (and, with respect to Chart, its stockholders) for Chart to merge with and into Bancorp Bank, subject to the terms and conditions set forth herein; WHEREAS, Bancorp will convert from mutual to stock form pursuant to a plan of conversion; WHEREAS, Bancorp Bank is a direct, wholly-owned subsidiary of Bancorp; WHEREAS, Chart will merge with Bancorp Bank, with Bancorp Bank as the surviving bank; WHEREAS, as a condition and inducement to Bancorp to enter into this Agreement, each person listed on Exhibit A to this Agreement ("SHAREHOLDER") is entering into an agreement, simultaneously with the execution of this Agreement, in the form of Exhibit B hereto (collectively, the "VOTING AGREEMENTS") pursuant to which each such Shareholder has agreed, among other things, to vote the Shareholder's shares of Chart Common Stock in favor of this Agreement and the transactions contemplated hereby; WHEREAS, as a condition and inducement to Bancorp to enter into this Agreement, each director of Chart is entering into an agreement, simultaneously with the execution of this Agreement, in the form of Exhibit C hereto (collectively, the "RELEASE AGREEMENTS") pursuant to which each such director has agreed to release Chart and any successors in interest from claims as specified therein. WHEREAS, the parties desire to make certain representations, warranties and agreements in connection with the business combination transactions described in this Agreement and to prescribe certain conditions thereto; NOW, THEREFORE, in consideration of the foregoing and the mutual covenants, representations, warranties and agreements contained herein, and intending to be legally bound hereby, the parties agree as follows: ARTICLE I. DEFINITIONS; DISCLOSURE 1.1. CERTAIN DEFINITIONS. The following terms are used in this Agreement with the meanings set forth below: "ACQUISITION PROPOSAL" shall mean (x) a bona fide proposal by any person (other than Bancorp or any subsidiary of Bancorp) to Chart or its stockholders to engage in a Change in Control Transaction, (y) a public statement by any person (other than Bancorp or any subsidiary of Bancorp) to Chart or its stockholders of such person's intention to make a proposal to engage in a Change in Control Transaction if this Agreement terminates or (z) the filing by any person (other than Bancorp or any subsidiary of Bancorp) of an application or notice with any Governmental Authority to engage in a Change in Control Transaction. "AGGREGATE CASH CONSIDERATION" shall be the product of the number of shares of Chart Common Stock outstanding immediately prior to the Effective Time times 0.45 times the Per Share Cash Consideration. "AGREEMENT" shall mean this Agreement, as amended or modified from time to time in accordance with Section 10.2. "ARTICLES OF MERGER" shall have the meaning set forth in Section 2.6(a). "AUTHORIZED REPRESENTATIVE" shall mean the Chief Executive Officer (with respect to Chart) or the Chief Executive or Chief Financial Officer (with respect to Bancorp). "BANCORP" shall have the meaning set forth in the preamble to this Agreement. "BANCORP ARTICLES" shall mean the Articles of Organization of Bancorp, as amended. "BANCORP BANK" shall mean Benjamin Franklin Savings Bank, and any successor thereto. "BANCORP BANK BYLAWS" shall mean the Bylaws of Bancorp Bank. "BANCORP BANK CHARTER" shall mean the Articles of Organization of Bancorp Bank "BANCORP BENEFIT PLANS" shall have the meaning set forth in Section 6.16(a). "BANCORP BOARD" shall mean the Board of Trustees of Bancorp (before the Conversion) and the Board of Directors of Bancorp (after the Conversion). "BANCORP BYLAWS" shall mean the Bylaws of Bancorp. "BANCORP COMMON STOCK" shall mean the common stock of Bancorp, which stock shall be authorized in the Conversion. - 2 - "BANCORP PREFERRED STOCK" shall mean the preferred stock of Bancorp, which stock shall be authorized in the Conversion. "BANCORP REGULATORY AUTHORITY" shall have the meaning set forth in Section 6.12(a). "BANCORP SPECIAL PAYMENT" shall have the meaning set forth in Section 9.3. "BANK REGULATOR" shall mean and include any pertinent federal or state Governmental Authority charged with the supervision of banks or bank or financial holding companies or engaged in the insurance of bank deposits, including without limitation, the Federal Reserve Board, the FDIC, the Depositors Insurance Fund of Massachusetts, the Co-operative Central Bank and the Massachusetts Bank Commissioner. "BHCA" shall mean the Bank Holding Company Act of 1956, as amended. "BOLI" shall have the meaning set forth in Section 5.23. "BUSINESS DAY" shall mean Monday through Friday of each week, except a legal holiday recognized as such by the U.S. Government or any day on which banking institutions in the Commonwealth of Massachusetts are authorized or obligated to close. "CASH ELECTION SHARES" shall have the meaning set forth in Section 3.2(b)(ii). "CERTIFICATE" shall mean any certificate that immediately prior to the Effective Time represented shares of Chart Common Stock. "CHANGE IN CONTROL TRANSACTION" shall mean (A) a merger, reorganization, tender or exchange offer, recapitalization, reorganization, liquidation, share exchange, consolidation or similar transaction involving Chart or any Chart Subsidiary, (B) the disposition, by sale, lease, exchange or otherwise, of assets of Chart or any Chart Subsidiary representing in either case 25% or more of the consolidated assets of Chart and Chart Subsidiaries, or (C) the issuance, sale or other disposition of (including by way of merger, consolidation, share exchange or any similar transaction) securities representing 19.9% or more of the voting power of Chart or any Chart Subsidiary. "CHART" shall have the meaning set forth in the preamble to this Agreement. "CHART AFFILIATES" shall have the meaning set forth in Section 7.8. "CHART BENEFIT PLANS" shall have the meaning set forth in Section 5.16(a). "CHART BOARD" shall mean the Board of Directors of Chart. "CHART BOARD RECOMMENDATION" shall have the meaning set forth in Section 7.4. "CHART BYLAWS" shall mean the Bylaws of Chart. "CHART CHARTER" shall mean the Amended and Restated Charter of Chart. - 3 - "CHART COMMON STOCK" shall mean the Series A and Series B common stock, $1.00 par value per share, of Chart. "CHART FINANCIAL STATEMENTS" shall have the meaning set forth in Section 5.7. "CHART LOAN PROPERTY" shall have the meaning set forth in Section 5.18(b). "CHART MEETING" shall have the meaning set forth in Section 7.4. "CHART OPTIONS" shall mean the options to acquire Chart Common Stock issued under the Chart Stock Option Plan. "CHART PREFERRED STOCK" shall mean the serial preferred stock, par value $1.00 per share, of Chart. "CHART REGULATORY AUTHORITIES" shall have the meaning set forth in Section 5.12(a). "CHART REPORTS" shall have the meaning set forth in Section 5.8. "CHART SPECIAL PAYMENT" shall have the meaning set forth in Section 9.4. "CHART STOCK" shall mean, collectively, Chart Common Stock and Chart Preferred Stock. "CHART STOCK OPTION PLAN" shall mean the Chart Bank 1996 Stock Option Plan, as amended. "CLOSING" and "CLOSING DATE" shall have the meanings set forth in Section 2.6(b). "CODE" shall mean the Internal Revenue Code of 1986, as amended. "COMMUNITY REINVESTMENT ACT" shall mean the Community Reinvestment Act of 1977, as amended. "CONSULTING AGREEMENT" has the meaning set forth in Section 7.14. "CONVERSION" shall mean the conversion of Bancorp from mutual to stock form. "CORPORATORS" shall mean the Corporators of Bancorp. "DETERMINATION DATE" shall mean the date on which the last required approval of a Governmental Authority is obtained with respect to the Transactions, without regard to any requisite waiting period. "DERIVATIVES CONTRACT" shall have the meaning set forth in Section 5.19. "DISCLOSURE SCHEDULE" shall have the meaning set forth in Section 1.3. "DISSENTING SHARES" shall have the meaning set forth in Section 3.6. - 4 - "DPC SHARES" shall mean shares of Chart Common Stock held in respect of debt previously contracted. "EFFECTIVE DATE" shall have the meaning set forth in Section 2.6(a). "EFFECTIVE TIME" shall have the meaning set forth in Section 2.6(a). "ELECTION DEADLINE" shall have the meaning set forth in Section 3.2(e). "ELECTION FORM" shall have the meaning set forth in Section 3.2(a)(ii). "ENVIRONMENTAL LAWS" shall mean any federal, state or local law, regulation, order, decree, permit, authorization, opinion or agency requirement relating to: (A) the protection or restoration of the environment, health, safety, or natural resources, (B) the handling, use, presence, disposal, release or threatened release of any Hazardous Substance or (C) wetlands, pollution, contamination or any injury or threat of injury to Persons or property in connection with any Hazardous Substance. "EQUAL CREDIT OPPORTUNITY ACT" shall mean the Equal Credit Opportunity Act, as amended. "EQUITY INTERESTS" shall mean, with respect to any Person, warrants, options, rights, subscriptions, calls, commitments, convertible securities and other arrangements or commitments of any character that call for the Person to issue, deliver or dispose, or cause to be issued, delivered or disposed, any of its or its Subsidiaries' capital stock or other ownership or equity interests of such Person or its Subsidiaries. "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended. "ERISA AFFILIATE" shall mean any entity that is considered one employer with Chart or Bancorp, as the case may be, under Section 4001(b)or Section 414 of the Code. "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder. "EXCHANGE AGENT" shall have the meaning set forth in Section 3.2(a). "EXPENSES" shall have the meaning set forth in Section 9.2(b). "EXPIRATION DATE" shall have the meaning set forth in Section 9.1(b). "FAIR HOUSING ACT" shall mean the Fair Housing Act, as amended. "FDIC" shall mean the Federal Deposit Insurance Corporation. "FEDERAL RESERVE ACT" shall mean the Federal Reserve Act, as amended. "FEDERAL RESERVE BOARD" shall mean the Board of Governors of the Federal Reserve System. - 5 - "GAAP" shall mean United States generally accepted accounting principles. "GOVERNMENTAL AUTHORITY" shall mean any United States or foreign, federal, state or local governmental commission, board, body, bureau, or other regulatory authority, agency, including courts and other judicial bodies, or any self-regulatory body or authority, including any instrumentality or entity designated to act for or on behalf of the foregoing. "HAZARDOUS SUBSTANCE" shall mean any substance that is: (A) listed, classified or regulated pursuant to any Environmental Law, (B) any petroleum product or by-product, asbestos-containing material, lead-containing paint or plumbing, polychlorinated biphenyls, radioactive materials or radon or (C) any other substance that is the subject of regulatory action by any Governmental Authority in connection with any Environmental Law. "INDEMNIFIED PARTY," "INDEMNIFIED PARTIES" and "INDEMNIFYING PARTY" shall have the meanings set forth in Section 7.12(a). "INSURANCE AMOUNT" shall have the meaning set forth in Section 7.12(c). "INSURANCE POLICIES" shall have the meaning set forth in Section 5.30. "JOINT VENTURE" shall mean any corporation, limited liability company, limited liability partnership, partnership, joint venture, trust, association or other entity that is not a Subsidiary of Chart, as the case may be, and in which (a) Chart, 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 FDIC's rules and regulations regarding activities and investments of insured state banks at 12 C.F.R. Section 362.2(g), or (b) Chart or any of its Subsidiaries is a general partner. "KNOWLEDGE" or any words or phrase of similar effect shall mean, with respect to any Person, the actual knowledge of such Person, after reasonable due inquiry. "LIENS" shall mean any charge, mortgage, pledge, security interest, restriction, options, rights of first refusal, claim, lien or encumbrance. "LOANS" shall have the meaning set forth in Section 5.22(a). "LOAN LOSS RESERVES" shall mean the reserves established by Chart in accordance with its customary practices with respect to Loans as of the Closing Date. "MASSACHUSETTS BANK COMMISSIONER" shall mean the Commissioner of Banks of The Commonwealth of Massachusetts. "MATERIAL ADVERSE EFFECT" shall mean, with respect to any Person, any change or effect that (i) is or would be reasonably likely to be material and adverse to the financial position, results of operations or business of such Person and its Subsidiaries taken as a whole or (ii) would materially impair the ability of any Person to perform their respective obligations - 6 - under any Transaction Document or otherwise materially impede the consummation of the Transactions. "MATERIAL CONTRACT" shall have the meaning set forth in Sections 5.14. "MGL" shall mean the Massachusetts General Laws, as amended. "MERGER" shall have the meaning set forth in Section 2.1. "MERGER CONSIDERATION" shall mean the number of whole shares of Bancorp Common Stock, plus cash in lieu of any factional share interest, and/or the amount of cash into which shares of Chart Common Stock shall be converted pursuant to the provisions of Article III. "MHPF" shall mean the Massachusetts Housing Partnership Fund. "MIXED ELECTION" shall have the meaning set forth in Section 3.2(b)(iii). "NASDAQ" shall mean The Nasdaq Stock Market, Inc.'s National Market. "NATIONAL LABOR RELATIONS ACT" shall mean the National Labor Relations Act, as amended. "NO-ELECTION SHARES" shall have the meaning set forth in Section 3.2(b)(iv). "OREO" shall mean other real estate owned. "PAYMENT EVENT" shall have the meaning set forth in Section 9.4(a). "PAYMENTS AGREEMENTS" shall have the meaning set forth in Section 7.14. "PENSION PLAN" shall have the meaning set forth in Section 5.16(b). "PER SHARE CASH CONSIDERATION" shall have the meaning set forth in Section 3.1(b)(ii). "PER SHARE MERGER CONSIDERATION" shall mean the Per Share Stock Consideration plus cash in lieu of any fractional share interest or the Per Share Cash Consideration. "PER SHARE STOCK CONSIDERATION" shall have the meaning set forth in Section 3.1(b)(i). "PERSON" shall mean any individual, bank, corporation, partnership, association, joint-stock company, business trust, limited liability company or unincorporated organization. "PREVIOUSLY DISCLOSED" by a party shall mean information set forth in a section of its Disclosure Schedule corresponding to the section of this Agreement where such term is used (except as otherwise specifically provided in Section 1.3 or otherwise in this Agreement). "PROCEEDING" shall have the meaning set forth in Section 7.12(a). "PROXY STATEMENT" shall have the meaning set forth in Section 7.3(a). - 7 - "REALLOCATED CASH SHARES" shall have the meaning set forth in Section 3.2(g)(i)(C). "REALLOCATED STOCK SHARES" shall have the meaning set forth in Section 3.2(g)(ii)(B). "REGISTRATION STATEMENT" shall mean each and both of the registration statements referred to in Section 7.3(a). "REPRESENTATIVES" shall have the meaning set forth in Section 7.9. "SAIF" shall mean the Savings Association Insurance Fund maintained by the FDIC. "SEC" shall mean the Securities and Exchange Commission. "SECURITIES ACT" shall mean the Securities Act of 1933, as amended, and the rules and regulations thereunder. "SHAREHOLDERS" shall have the meaning set forth in the recitals to this Agreement. "SPECIAL PAYMENT TERMINATION DATE" shall have the meaning set forth in Section 9.4(c). "STOCK ELECTION SHARES" shall have the meaning set forth in Section 3.2(b)(i). "STOCK OPTION EXCHANGE RATIO" shall mean the Per Share Stock Consideration. "SUBSIDIARY" shall have the meaning ascribed to that term in Rule 1-02 of Regulation S-X of the SEC. "SURVIVING BANK" shall have the meaning set forth in Section 2.1. "TAX" and "TAXES" mean all federal, state, local or foreign income, gross income, gains, gross receipts, sales, use, ad valorem, goods and services, capital, production, transfer, franchise, windfall profits, license, withholding, payroll, employment, disability, employer health, excise, estimated, severance, stamp, occupation, property, environmental, custom duties, unemployment or other taxes of any kind whatsoever, together with any interest, additions or penalties thereto and any interest in respect of such interest and penalties. "TAX RETURNS" shall mean any return, declaration, report, claim for refund, information return or other document (including any schedules or attachments thereto) filed or required to be filed in connection with the determination, assessment or collection of any Tax or the administration of any laws, regulations or administrative requirements relating to any Tax. "TENDER OFFER" shall mean a tender offer or exchange offer to purchase any shares of Chart Common Stock such that, upon consummation of such offer, the person making such tender offer or exchange offer would own or control 19.9% or more of the then outstanding shares of Chart Common Stock. "TIME EXTENSION EVENT" shall have the meaning set forth in Section 9.4(b). "TRANSACTIONS" shall mean the Conversion and the Merger. - 8 - "TRANSACTION DOCUMENT" shall mean any and all of this Agreement, the Disclosure Schedules of Chart and Bancorp, the Voting Agreements, the Release Agreements, the Payments Agreements and the Consulting Agreements. "UNPERFECTED DISSENTING SHARES" shall have the meaning set forth in Section 3.6. "USA PATRIOT ACT" shall have the meaning set forth in Section 5.28. "VOTING AGREEMENTS" shall have the meaning set forth in the recitals to this Agreement. "WELFARE PLAN" shall mean an employee welfare benefit plan (within the meaning of Section 3(1) of ERISA). 1.2. OTHER DEFINITIONAL MATTERS. Unless the context otherwise requires, a term defined anywhere in this Agreement has the same meaning throughout; all references to "the Agreement" or "this Agreement" are to this Agreement as modified, supplemented or amended from time to time; and terms defined in the singular shall have a comparable meaning when used in the plural, and vice versa. 1.3. DISCLOSURE SCHEDULES. On or prior to the date hereof, Bancorp has delivered to Chart a schedule and Chart has delivered to Bancorp a schedule (respectively, its "DISCLOSURE SCHEDULE") setting forth, among other things, items the disclosure of which is necessary or appropriate either in response to an express disclosure requirement contained in a provision hereof or as an exception to one or more representations or warranties contained in Article V or Article VI or to one or more of its covenants contained in Article IV. The mere inclusion of a fact, circumstance or event in a Disclosure Schedule shall not be deemed an admission by a party that such item represents a material exception or that such item is reasonably likely to result in a Material Adverse Effect. Any matter disclosed pursuant to one section of a party's Disclosure Schedule shall be deemed disclosed for all purposes of such party's Disclosure Schedule, but only to the extent that it is reasonably apparent from a reading of the disclosure that it also qualifies or applies to other sections of the Agreement and the corresponding Schedule. ARTICLE II. THE MERGER 2.1. THE MERGER. Subject to the terms and conditions of this Agreement, at the Effective Time, Chart shall be merged with and into Bancorp Bank (the "MERGER") and Bancorp Bank shall be the surviving bank of the Merger. The identity, rights, privileges, powers, franchises, properties, assets, liabilities and obligations of Bancorp Bank shall continue unaffected and unimpaired by the Merger. At the time of the Merger, the separate existence of Chart shall cease and all of the rights, privileges, powers, franchises, properties, assets, liabilities and obligations of Chart shall be vested in and assumed by Bancorp Bank, as the surviving bank (the "SURVIVING BANK"). 2.2. SURVIVING BANK. (a) CHARTER AND BYLAWS. The Charter and Bylaws of Surviving Bank shall be the Charter and Bylaws of Bancorp Bank as in effect immediately prior to the Effective Time, until - 9 - thereafter amended as provided therein and by applicable law. (b) NAME AND PURPOSES. The name of Surviving Bank shall be Benjamin Franklin Savings Bank, Benjamin Franklin Bank or such other name as Bancorp may designate, with the prior written consent of Chart (which consent shall not be unreasonably withheld), and the purposes of Surviving Bank shall be the purposes of Bancorp Bank as contained in its Charter, until thereafter amended as provided in the Charter of Surviving Bank and by applicable law. (c) CAPITAL STOCK. The total number of shares and the par value of each class of stock that Surviving Bank is authorized to issue and the description of each class, with their respective preferences, voting powers, qualifications, special or relative rights or privileges, shall be the same as that of Bancorp Bank as contained in its Charter, until thereafter amended as provided in said Charter and by applicable law. (d) DIRECTORS AND OFFICERS OF SURVIVING BANK. (i) Except as set forth in Section 2.2(d)(ii), the directors and officers of Surviving Bank immediately after the Merger shall be the directors and officers of Bancorp Bank immediately prior to the Merger, until such time as their successors shall be duly elected and qualified. (ii) Promptly following the Effective Time, six persons (one of whom shall be Chart's President and Chief Executive Officer) who were serving as directors of Chart as of the date of this Agreement and who are mutually agreed upon by Chart and Bancorp shall be elected or appointed to the Surviving Bank Board of Directors. Such former directors of Chart shall be classified evenly, to the extent practicable, into each of the classes of the Surviving Bank Board of Directors and each of the committees of the Surviving Bank Board of Directors shall include a number of former Chart directors such that, to the extent practicable, former Chart directors serve on each committee in the same proportions as they serve on the Surviving Bank Board of Directors. If any person initially designated to be a Director of Surviving Bank is unable at the time of such election or appointment to serve as a Director of Surviving Bank for any reason, a replacement or replacements designated by the mutual agreement of (i) the Directors of Surviving Bank who were formerly directors of Chart (ii) and the Directors of Surviving Bank who were formerly directors of Bancorp Bank shall be so elected or appointed instead. 2.3. BANCORP. (a) CHARTER AND BYLAWS. The Charter and Bylaws of Bancorp as of the Effective Time shall be in the forms reviewed and approved by the Massachusetts Bank Commissioner as part of Bancorp's Conversion approval process, until thereafter amended as provided therein and by applicable law. Bancorp shall give Chart the opportunity to review and comment on its Charter and Bylaws prior to submitting them to the Massachusetts Bank Commissioner for approval, and will accept and honor the reasonable comments and requests of Chart with respect to the terms of the Bancorp Charter and Bylaws to the extent such comments and requests relate to implementation of Section 2.3(b) in accordance with its terms, and will otherwise give due - 10 - consideration to the reasonable comments of Chart relating to the terms of the Bancorp Charter and Bylaws. (b) DIRECTORS OF BANCORP. Promptly following the Effective Time, six persons (one of whom shall be Chart's President and Chief Executive Officer) who were serving as directors of Chart as of the date of this Agreement and who are mutually agreed upon by Chart and Bancorp shall be elected or appointed to the Bancorp Board of Directors. Such former directors of Chart shall be classified evenly, to the extent practicable, into each of the classes of the Bancorp Board and each of the committees of the Bancorp Board shall include a number of former Chart directors, to the extent practicable, such that former Chart directors serve on each committee in the same proportions as they serve on the Bancorp Board. If any person initially designated to be a Director of Bancorp is unable at the time of such election or appointment to serve as a Director of Bancorp for any reason, a replacement or replacements designated by the mutual agreement of (i) the Directors of Bancorp who were formerly directors of Chart and (ii) the Directors of Bancorp who were formerly trustees of Bancorp shall be so elected or appointed instead. 2.4. EFFECT OF THE MERGER. At the Effective Time, the effect of the Merger shall be as provided in this Agreement and in the applicable provisions of Chapters 168, 170 and 172 of the MGL. Without limiting the generality of the foregoing, and subject thereto, at the Effective Time, all the property, rights, privileges, powers and franchises of Chart shall vest in Surviving Bank, and all debts, liabilities, obligations, restrictions, disabilities and duties of Chart shall become the debts, liabilities, obligations, restrictions, disabilities and duties of Surviving Bank. 2.5. ADDITIONAL ACTIONS. If, at any time after the Effective Time, Surviving Bank shall consider that any further assignments or assurances in law or any other acts are necessary or desirable to (i) vest, perfect or confirm, of record or otherwise, in Surviving Bank its right, title or interest in, to or under any of the rights, properties or assets of Chart acquired or to be acquired by Surviving Bank as a result of, or in connection with, the Merger, or (ii) otherwise carry out the purposes of this Agreement, Chart and its proper officers and directors shall be deemed to have granted to Surviving Bank an irrevocable power of attorney to execute and deliver all such proper deeds, assignments and assurances in law and to do all acts necessary or proper to vest, perfect or confirm title to and possession of such rights, properties or assets in Surviving Bank and otherwise to carry out the purposes of this Agreement, and the proper officers and directors of Surviving Bank are fully authorized in the name of Surviving Bank or otherwise to take any and all such action. 2.6. EFFECTIVE DATE AND EFFECTIVE TIME; CLOSING. (a) Subject to the satisfaction or waiver of the conditions set forth in Article VIII and those conditions that by their nature are to be satisfied at the consummation of the Merger, but subject to the fulfillment or waiver of those conditions), the parties shall cause articles of merger relating to the Merger (the "ARTICLES OF MERGER") to be filed with the Secretary of State of The Commonwealth of Massachusetts pursuant to the MGL on (i) a date selected by Bancorp after such satisfaction or waiver which is no later than five Business Days after such satisfaction or waiver, or (ii) such other date to which the parties may agree in writing; provided, however, that the closing of the Conversion, including all of the necessary filings in connection therewith, shall - 11 - occur and become effective prior to and on the same day as the effective date of the Articles of Merger. The Merger shall become effective on the date the Articles of Merger, accompanied by payment of the filing fee (as provided in Chapter 156B, Section 6 and Section 114 of the MGL), have been examined by and received the endorsed approval of the Secretary of State of the Commonwealth of Massachusetts or on such later date as may be specified therein (the "EFFECTIVE DATE"). The "EFFECTIVE TIME" of the Merger shall be the time at which the Articles of Merger with respect to the Merger, accompanied by payment of the filing fee (as provided in Chapter 156B, Section 6 and Section 114 of the MGL), have been examined by an received the endorsed approval of the Secretary of State of the Commonwealth of Massachusetts or as set forth in such filing (the "EFFECTIVE TIME"). The filing of the Articles of Merger and all filings necessary to complete the Conversion shall be made on the Closing Date. (b) A closing (the "CLOSING") shall take place on the date on which the Articles of Merger are filed at 10:00 a.m., Eastern Time, at the principal offices of Foley Hoag LLP, Boston, Massachusetts, or at such other place, at such other time, or on such other date as the parties may mutually agree upon (such date, the "CLOSING DATE"). At the Closing, there shall be delivered to Bancorp and Chart the opinions, certificates and other documents required to be delivered under Article VIII hereof. ARTICLE III. CONSIDERATION; EXCHANGE PROCEDURES 3.1. CONVERSION OF SHARES. At the Effective Time, by virtue of the Merger and without any action on the part of a holder of stock or any other Equity Interests of Chart: (a) Each share of Chart Common Stock held of record immediately prior to the Effective Time by Chart, Bancorp or any Subsidiary of Chart or of Bancorp (other than DPC Shares) shall be canceled and retired at the Effective Time and no consideration shall be issued in exchange therefor. (b) Subject to Sections 3.2, 3.5, 3.6 and 3.7, each share of Chart Common Stock issued and outstanding immediately prior to the Effective Time (other than shares to be canceled in accordance with Section 3.1(a)) shall be converted into, and shall be canceled in exchange for, the right to receive: (i) 3.075 shares of Bancorp Common Stock (the "PER SHARE STOCK CONSIDERATION"), or (ii) a cash amount equal to $30.75 per share of Chart Common Stock (the "PER SHARE CASH CONSIDERATION"). The definition of the Per Share Stock Consideration set forth in Section 3.1(b)(i) assumes that the initial public offering price of the Bancorp Common Stock in the Conversion will be $10.00 per share, which price shall be the price at which shares of Bancorp Common Stock are initially sold in the Conversion, based upon the appraised pro forma market value of Bancorp Common Stock determined by a qualified independent appraiser selected by Bancorp and approved by the Massachusetts Bank Commissioner (the "IPO PRICE"). If the IPO Price is an amount other than $10.00, the Per Share Stock Consideration shall be proportionately adjusted so that (i) the - 12 - number of shares of Bancorp Common Stock received for each share of Chart Bank Common Stock times (ii) the IPO Price, equals $30.75. 3.2. ELECTION PROCEDURES. (a) Bancorp shall designate an exchange agent to act as agent (the "EXCHANGE AGENT") for purposes of conducting the election procedure and the exchange procedure described in Sections 3.2 and 3.3. Provided that Chart has delivered, or caused to be delivered, to the Exchange Agent all information that is necessary for the Exchange Agent to perform its obligations as specified herein, the Exchange Agent shall, no later than the twenty-fifth (25th) Business Day prior to the anticipated Effective Date, mail or make available to each holder of record of a Certificate or Certificates: (i) a notice and letter of transmittal (which shall specify that delivery shall be effected, and risk of loss and title to the Certificates theretofore representing shares of Chart Common Stock shall pass, only upon proper delivery of the Certificates to the Exchange Agent) advising such holder of the anticipated effectiveness of the Merger and the procedure for surrendering to the Exchange Agent such Certificate or Certificates in exchange for the consideration set forth in Section 3.1(b) hereof deliverable in respect thereof pursuant to this Agreement and (ii) an election form in such form as Bancorp and Chart shall mutually agree (the "ELECTION FORM"). (b) Each Election Form shall permit the holder (or in the case of nominee record holders, the beneficial owner through proper instructions and documentation) (i) to elect to receive Bancorp Common Stock with respect to all of such holder's Chart Common Stock as hereinabove provided (the "STOCK ELECTION SHARES"), (ii) to elect to receive cash with respect to all of such holder's Chart Common Stock as hereinabove provided (the "CASH ELECTION SHARES"), (iii) to elect to receive Bancorp Common Stock with respect to part of such holder's Chart Common Stock and to receive cash with respect to the remaining part of such holder's Chart Common Stock as hereinabove provided (a "MIXED ELECTION"), or (iv) to indicate that such holder makes no such election with respect to such holder's shares of Chart Common Stock (the "NO-ELECTION SHARES"). (c) With respect to each holder of Chart Common Stock who makes a Mixed Election, the shares of Chart Common Stock such holder elects to be converted into the right to receive Bancorp Common Stock shall be treated as Stock Election Shares and the shares such holder elects to be converted into the right to receive cash shall be treated as Cash Election Shares for purposes of the provisions contained in Sections 3.2(b), 3.2(g) and 3.2(h). Nominee record holders who hold Chart Common Stock on behalf of multiple beneficial owners shall indicate how many of the shares held by them are Stock Election Shares, Cash Election Shares and No-Election Shares. - 13 - (d) If a shareholder either (i) does not submit a properly completed Election Form prior to the Election Deadline or (ii) revokes an Election Form prior to the Election Deadline and does not resubmit a properly completed Election Form prior to the Election Deadline, the shares of Chart Common Stock held by such shareholder shall be treated as No-Election Shares. Any Dissenting Shares shall be deemed to be Cash Election Shares, and with respect to such shares the holders thereof shall in no event receive consideration consisting of Bancorp Common Stock. (e) The term "ELECTION DEADLINE" shall mean 5:00 p.m., Eastern Time, on the 20th Business Day following but not including the date of mailing of the Election Form or such other date as Bancorp and Chart shall mutually agree upon. (f) Any election to receive Bancorp Common Stock or cash shall have been properly made only if the Exchange Agent shall have actually received a properly completed Election Form by the Election Deadline. An Election Form will be properly completed only if accompanied by Certificates representing all shares of Chart Common Stock covered thereby, subject to the provisions of Section 3.3(c). Any Election Form may be revoked or changed by the Person submitting such Election Form to the Exchange Agent by written notice to the Exchange Agent only if such written notice is actually received by the Exchange Agent at or prior to the Election Deadline. The Certificate or Certificates representing Chart Common Stock relating to any revoked Election Form shall be promptly returned without charge to the Person submitting the Election Form to the Exchange Agent. The Exchange Agent shall have reasonable discretion to determine when any election, modification or revocation is received, whether any such election, modification or revocation has been properly made and to disregard immaterial defects in any Election Form, and any good faith decisions of the Exchange Agent regarding such matters shall be binding and conclusive. Neither Bancorp nor the Exchange Agent shall be under any obligation to notify any Person of any defect in an Election Form. (g) Within five (5) Business Days after the Election Deadline, the Exchange Agent shall calculate the allocation among holders of Chart Common Stock of rights to receive Bancorp Common Stock or cash in the Merger in accordance with the Election Forms as follows: (i) If the number of Cash Election Shares times the Per Share Cash Consideration is less than the Aggregate Cash Consideration, then: (A) all Cash Election Shares (subject to Section 3.6 with respect to Dissenting Shares) shall be converted into the right to receive cash, (B) No-Election Shares shall then be deemed to be Cash Election Shares to the extent necessary to have the total number of Cash Election Shares times the Per Share Cash Consideration equal the Aggregate Cash Consideration. If less than all of the No-Election Shares need to be treated as Cash Election Shares, then the Exchange Agent shall select which No-Election Shares shall be treated as Cash Election Shares in such manner as the Exchange Agent shall determine in accordance with Section 3.2(h), and all remaining No-Election Shares shall thereafter be treated as Stock Election Shares, (C) If all of the No-Election Shares are treated as Cash Election Shares under the preceding subsection, and the total number of Cash Election Shares (including such No-Election Shares treated as such) times the Per Share Cash Consideration remains less - 14 - than the Aggregate Cash Consideration, then the Exchange Agent shall convert on a pro rata basis as described below a sufficient number of Stock Election Shares into Cash Election Shares ("REALLOCATED CASH SHARES") such that the sum of the number of Cash Election Shares plus the number of Reallocated Cash Shares times the Per Share Cash Consideration equals the Aggregate Cash Consideration, and all Reallocated Cash Shares will be converted into the right to receive the Per Share Cash Consideration, and (D) the Stock Election Shares that are not Reallocated Cash Shares shall be converted into the right to receive the Per Share Stock Consideration. (ii) If the number of Cash Election Shares times the Per Share Cash Consideration is greater than the Aggregate Cash Consideration, then: (A) all Stock Election Shares and all No-Election Shares shall be converted into the right to receive Bancorp Common Stock, (B) the Exchange Agent shall convert on a pro rata basis as described below a sufficient number of Cash Election Shares (excluding any Dissenting Shares) ("REALLOCATED STOCK SHARES") such that the number of remaining Cash Election Shares (including Dissenting Shares) times the Per Share Cash Consideration equals the Aggregate Cash Consideration, and all Reallocated Stock Shares shall be converted into the right to receive the Per Share Stock Consideration, and (C) the Cash Election Shares (subject to Section 3.6 with respect to Dissenting Shares) that are not Reallocated Stock Shares shall be converted into the right to receive the Per Share Cash Consideration. (iii) If the number of Cash Election Shares times the Per Share Cash Consideration is equal to the Aggregate Cash Consideration, then Sections 3.2(g)(i) and 3.2(g)(ii) above shall not apply and all No-Election Shares and all Stock Election Shares will be converted into the right to receive the Per Share Stock Consideration. (h) In the event that the Exchange Agent is required pursuant to Section 3.2(g)(i)(C) to convert some Stock Election Shares into Reallocated Cash Shares, each holder of Stock Election Shares shall be allocated a pro rata portion of the total Reallocated Cash Shares. In the event the Exchange Agent is required, pursuant to Section 3.2(g)(ii)(B), to convert some Cash Election Shares into Reallocated Stock Shares, each holder of Cash Election Shares shall be allocated a pro rata portion of the total Reallocated Stock Shares. In the event the Exchange Agent is required pursuant to Section 3.2(g)(i)(B) to convert some No-Election Shares into Cash Election Shares, such conversion shall be allocated on a pro rata basis among No-Election Shares. (i) Bancorp will include in its plan of conversion relating to the Conversion a provision to the effect that, if any shares of Bancorp Common Stock that are offered for sale in the community offering that is conducted as part of the Conversion remain unsold, such shares may, in the sole discretion of Bancorp, be issued to holders of Chart Common Stock as part of the Merger Consideration. 3.3. EXCHANGE PROCEDURES. (a) At or prior to the Effective Time, for the benefit of the holders of Certificates, - 15 - Bancorp shall deliver to the Exchange Agent certificates evidencing the number of shares of Bancorp Common Stock issuable and the Aggregate Cash Consideration payable pursuant to this Article III in exchange for Certificates representing outstanding shares of Chart Common Stock. The Exchange Agent shall not be entitled to vote or exercise any rights of ownership with respect to the shares of Bancorp Common Stock held by it from time to time hereunder, except that it shall receive and hold all dividends or other distributions paid or distributed with respect to such shares for the account of the Persons entitled thereto. (b) After completion of the allocation referred to in Section 3.2(g), each holder of an outstanding Certificate or Certificates who has surrendered such Certificate or Certificates to the Exchange Agent will, upon acceptance thereof by the Exchange Agent, be entitled to a certificate or certificates representing the number of whole shares of Bancorp Common Stock and the amount of cash into which the aggregate number of shares of Chart Common Stock previously represented by such Certificate or Certificates surrendered shall have been converted pursuant to this Agreement and any other distribution theretofore paid with respect to Bancorp Common Stock issuable in the Merger, if such holder's shares of Chart Common Stock have been converted into Bancorp Common Stock, in each case without interest. The Exchange Agent shall accept such Certificates upon compliance with such reasonable terms and conditions as the Exchange Agent may impose to effect an orderly exchange thereof in accordance with normal exchange practices. Each outstanding Certificate which prior to the Effective Time represented Chart Common Stock and that is not surrendered to the Exchange Agent in accordance with the procedures provided for herein shall, except as otherwise herein provided, until duly surrendered to the Exchange Agent be deemed to evidence ownership of the number of shares of Bancorp Common Stock or the right to receive the amount of cash into which such Chart Common Stock shall have been converted. After the Effective Time, there shall be no further transfer on the records of Chart of Certificates representing shares of Chart Common Stock and if such Certificates are presented to Chart for transfer, they shall be cancelled against delivery of certificates for Bancorp Common Stock or cash as hereinabove provided. No dividends that have been declared will be remitted to any Person entitled to receive shares of Bancorp Common Stock under this Agreement until such Person surrenders the Certificate or Certificates representing Chart Common Stock, at which time such dividends shall be remitted to such Person, without interest. (c) Appropriate transmittal materials in a form satisfactory to Bancorp (including a letter of transmittal specifying that delivery shall be effected and risk of loss and title to such certificate shall pass, only upon delivery of such certificate to the Exchange Agent) shall be mailed as soon as practicable after the Effective Time to each holder of record of Chart Common Stock as of the Effective Time who did not previously submit a properly completed Election Form. Bancorp shall not be obligated to deliver cash and/or a certificate or certificates representing shares of Bancorp Common Stock to which a holder of Chart Common Stock would otherwise be entitled as a result of the Merger until such holder surrenders the Certificate or Certificates representing the shares of Chart Common Stock for exchange as provided in this Section 3.3, or, in default thereof, an appropriate affidavit of loss and indemnity agreement and/or a bond as may be required by Bancorp or the Exchange Agent. If any certificates evidencing shares of Bancorp Common Stock are to be issued in a name other than that in which the Certificate evidencing Chart Common Stock surrendered in exchange therefor is registered, it shall be a condition of the issuance thereof that the Certificate so surrendered shall be properly - 16 - endorsed or accompanied by an executed form of assignment separate from the Certificate and otherwise in proper form for transfer and that the Person requesting such exchange pay to the Exchange Agent any transfer or other tax required by reason of the issuance of a certificate for shares of Bancorp Common Stock in any name other than that of the registered holder of the Certificate surrendered or otherwise establish to the satisfaction of the Exchange Agent that such tax has been paid or is not payable. (d) Any portion of the shares of Bancorp Common Stock and cash delivered to the Exchange Agent by Bancorp pursuant to Section 3.3(a) that remains unclaimed by the stockholders of Chart for one year after the Effective Time (as well as any proceeds from any investment thereof) shall be delivered by the Exchange Agent to Bancorp. Any stockholders of Chart who have not theretofore complied with Section 3.3(c) shall thereafter look only to Bancorp for the consideration deliverable in respect of each share of Chart Common Stock such shareholder holds as determined pursuant to this Agreement without any interest thereon. If outstanding Certificates for shares of Chart Common Stock are not surrendered or the payment for them is not claimed prior to the date on which such shares of Bancorp Common Stock or cash would otherwise escheat to or become the property of any governmental unit or agency, the unclaimed items shall, to the extent permitted by abandoned property and any other applicable law, become the property of Bancorp (and to the extent not in its possession shall be delivered to it), free and clear of all claims or interest of any Person previously entitled to such property. Neither the Exchange Agent nor any party to this Agreement shall be liable to any holder of stock represented by any Certificate for any consideration paid to a public official pursuant to applicable abandoned property, escheat or similar laws. Bancorp and the Exchange Agent shall be entitled to rely upon the stock transfer books of Chart to establish the identity of those Persons entitled to receive the consideration specified in this Agreement, which books shall be conclusive with respect thereto. In the event of a dispute with respect to ownership of stock represented by any Certificate, Bancorp and the Exchange Agent shall be entitled to deposit any consideration represented thereby in escrow with an independent third party and thereafter be relieved with respect to any claims thereto. (e) Notwithstanding anything in this Agreement to the contrary, Certificates surrendered for exchange by any Chart Affiliate shall not be exchanged for certificates representing shares of Bancorp Common Stock to which such Chart Affiliate may be entitled pursuant to the terms of this Agreement until Bancorp has received a written agreement from such Person as specified in Section 7.8. 3.4. RIGHTS AS SHAREHOLDERS; STOCK TRANSFERS. At the Effective Time, holders of Chart Stock shall cease to be, and shall have no rights as, stockholders of Chart other than to receive the consideration provided under this Article III. After the Effective Time, there shall be no transfers on the stock transfer books of Chart of shares of Chart Stock. 3.5. NO FRACTIONAL SHARES. Notwithstanding any other provision of this Agreement, neither certificates nor scrip for fractional shares of Bancorp Common Stock shall be issued in the Merger. Each holder of Chart Common Stock who otherwise would have been entitled to a fraction of a share of Bancorp Common Stock (after taking into account all Certificates delivered by such holder) shall receive in lieu thereof cash (without interest) in an amount determined by multiplying the fractional share interest to which such holder would otherwise be entitled by the - 17 - Per Share Cash Consideration. No such holder shall be entitled to dividends, voting rights or any other rights in respect of any fractional share. 3.6. DISSENTING SHARES. Each outstanding share of Chart Common Stock the holder of which has perfected his right to dissent under applicable law and has not effectively withdrawn or lost such right as of the Effective Time (the "DISSENTING SHARES") shall not be converted into or represent a right to receive shares of Bancorp Common Stock and cash hereunder. Rather, the holder thereof shall be entitled only to payment of the appraised value of such Dissenting Shares in accordance with the provisions of Section 26D of Chapter 170 of the MGL. Chart shall give Bancorp (i) prompt notice of any demands filed pursuant to such Section 26D received by Chart, withdrawals of such demands, and any other instruments served in connection with such demands pursuant to applicable law and received by Chart, and (ii) the opportunity to participate in all negotiations and proceedings with respect to demands under applicable law consistent with the obligations of Chart thereunder. Chart shall not, except with the prior written consent of Bancorp's Authorized Representative, (x) make any payment with respect to, or to any person making, any such demand, (y) offer to settle or settle any such demand or (z) waive any failure to timely deliver a written demand in accordance with applicable law. If any holder of Dissenting Shares shall fail to perfect or shall have effectively withdrawn or lost the right to dissent (which shares are referred to as "UNPERFECTED DISSENTING SHARES") at any time, the Unperfected Dissenting Shares held by such holder shall be converted on a share by share basis into the right to receive the Per Share Stock Consideration and/or the Per Share Cash Consideration in accordance with the applicable provisions of this Agreement, as Bancorp or the Exchange Agent shall determine, without any interest thereon. Any payments made in respect of Dissenting Shares shall be made by Surviving Bank. 3.7. ANTI-DILUTION PROVISIONS. If, between the date hereof and the Effective Time, the shares of Chart Common Stock shall be changed or adjusted into a different number or class of shares by reason of any reclassification, recapitalization, split-up, combination, subdivision, exchange of shares or readjustment, or a dividend thereon, payable in stock or other security convertible or exchangeable into stock, shall be declared with a record date within said period, the Per Share Stock Consideration shall be adjusted accordingly. The provisions of this Agreement assume that, at the Effective Time, there will be no more than an aggregate of 1,557,000 shares of Chart Common Stock outstanding or issuable upon the exercise of options or warrants or otherwise. If there is any change in this number as of the Effective Time, the Merger Consideration will be appropriately adjusted. 3.8. WITHHOLDING RIGHTS. Bancorp (through the Exchange Agent, if applicable) shall be entitled to deduct and withhold from any amounts otherwise payable pursuant to this Agreement to any holder of shares of Chart Common Stock such amounts as Bancorp is required under the Code or any state, local or foreign tax law or regulation thereunder to deduct and withhold with respect to the making of such payment. Any amounts so withheld shall be treated for all purposes of this Agreement as having been paid to the holder of Chart Common Stock in respect of which such deduction and withholding was made by Bancorp. 3.9. CHART OPTIONS. At the Effective Time, each Chart Option that is outstanding and unexercised immediately prior to the Effective Time, whether or not then vested and exercisable, shall be terminated and each grantee thereof shall be entitled to receive, in lieu of each share of - 18 - Chart Common Stock that would otherwise have been issuable upon the exercise of such options, whether or not then vested or exercisable, an amount of cash computed by multiplying (i) the difference between (x) the Per Share Cash Consideration and (y) the per share exercise price applicable to such Chart Option by (ii) the number of such shares of Chart Common Stock subject to such Chart Option. Chart agrees to take or to cause to be taken all action necessary to provide for such termination and payment effective at or before the Effective Time. ARTICLE IV. ACTIONS PENDING MERGER 4.1. AGREEMENTS OF CHART. (a) Chart covenants and agrees that, except as expressly contemplated by this Agreement, between the date of this Agreement and the Effective Time, unless Bancorp shall otherwise agree in writing, (i) the business of Chart and Chart's Subsidiaries shall be conducted only in, and Chart and Chart's Subsidiaries shall not take any action except in, the usual, regular and ordinary course of business and generally to conduct their business in substantially the same way as heretofore conducted, and without limiting the foregoing, to continue to operate in the same geographic markets serving the same market segments and maintain its current loan, deposit, banking products and service programs on substantially the same terms and conditions; (ii) Chart shall use commercially-reasonable efforts to preserve the business organization of Chart and Chart's Subsidiaries, to keep available the present services of the officers, employees and consultants of Chart and Chart's Subsidiaries and to preserve the current relationships and goodwill of Chart and Chart's Subsidiaries with customers, suppliers and other Persons with which Chart or any of Chart's Subsidiaries have business relationships; and (iii) Chart shall take no action that would materially adversely affect or materially delay the ability of Chart to obtain any necessary approvals of any Governmental Authority required for the transactions contemplated hereby or to perform its covenants and agreements under any Transaction Document. (b) Without limiting the generality of Section 4.1(a) above, except as expressly contemplated by this Agreement, Chart shall not, nor shall Chart permit any of Chart's Subsidiaries, between the date of this Agreement and the Effective Time, directly or indirectly do, or publicly announce an intention to do, any of the following without the prior written consent of Bancorp's Authorized Representative (which agreement shall not be unreasonably withheld or delayed): (i) CAPITAL STOCK. Other than pursuant to the Equity Interests set forth on Section 4.1(b)(i) of Chart's Disclosure Schedule and outstanding on the date hereof, (i) issue, sell or otherwise permit to become outstanding, or authorize the creation of, any additional shares of stock or any Equity Interests or (ii) permit any additional shares of stock to become subject to grants of employee or director stock options or other Equity Interests. (ii) DIVIDENDS; ETC. (i) Make, declare, pay or set aside for payment any dividend on or in respect of, or declare or make any distribution on any shares of Chart Stock, other than a regular, quarterly cash dividend at a rate not in excess of $0.16 per share on Chart Common Stock, declared on the first day of each calendar quarter and paid within - 19 - ten (10) days thereafter; provided, however, that any quarterly cash dividend declared on April 1, 2005 (and any subsequent quarterly dividend declaration date while this Agreement is in effect) may be at a rate not in excess of $0.18 per share on Chart Common Stock, or (ii) directly or indirectly adjust, split, combine, redeem, reclassify, purchase or otherwise acquire, or issue any other securities in respect of, in lieu of, or in substitution for, any shares of its capital stock or any securities or obligations convertible into or exchangeable for any shares of its capital stock (other than pursuant to the Equity Interests set forth on Schedule 5.2 of Chart's Disclosure Schedule and outstanding on the date hereof). (iii) CONTRACTS. Except as set forth in Section 4.1(b)(iii) of Chart's Disclosure Schedule, as otherwise permitted under this Section 4.1 or as required by law, enter into or terminate any Material Contract (as defined in Section 5.13) or amend or modify any of its existing Material Contracts. (iv) HIRING. Hire any Person as an employee of Chart or any of its Subsidiaries or promote any employee, except (i) to satisfy contractual obligations existing as of the date hereof and set forth on Schedule 4.1(b)(iv) of Chart's Disclosure Schedule, and (ii) Persons hired to fill any vacancies arising after the date hereof and whose employment is terminable at the will of Chart or a Subsidiary of Chart, as applicable, provided, however, that Chart shall not hire any Person who would have a base salary, including any guaranteed bonus or any similar bonus, considered on an annual basis of more than $50,000. (v) BENEFIT PLANS. Enter into, establish, adopt, renew or amend (except (i) as may be required by applicable law, (ii) to satisfy contractual obligations existing as of the date hereof and set forth on Schedule 4.1(b)(v) of Chart's Disclosure Schedule or (iii) as otherwise contemplated by this Agreement) any pension, retirement, stock option, stock purchase, savings, profit sharing, deferred compensation, consulting, bonus, group insurance or other employee benefit, incentive or welfare contract, plan or arrangement, or any trust agreement (or similar arrangement) related thereto, in respect of any director, officer or employee of Chart or its Subsidiaries or take any action to accelerate the vesting or exercisability of stock options, restricted stock or other compensation or benefits payable thereunder except pursuant to this Agreement. (vi) DISPOSITIONS. Sell, transfer, mortgage, encumber or otherwise dispose of or discontinue any of its assets, deposits, business or properties, or cancel or release any indebtedness of a Person or any claims held by any Person, except in the ordinary course of business consistent with past practice. (vii) COMPENSATION; EMPLOYMENT AGREEMENTS. Except as contemplated by this Agreement, enter into or amend or renew any employment, consulting, severance or similar agreements or arrangements with any director, officer or employee of Chart or its Subsidiaries or grant any salary or wage increase or increase any employee benefit (including incentive or bonus payments), except (i) for normal individual increases in compensation to employees (other than employees who are subject to Payments Agreements) in the ordinary course of business consistent with past practice in - 20 - connection with annual reviews, provided that such increases shall not result in an annual adjustment in base compensation of more than 4% in the aggregate for all employees of Chart for the 2004 calendar year, and (ii) for bonus payments in the ordinary course of business consistent with past practices, provided that such payments shall not exceed in the aggregate the amount set forth on Section 4.1(b)(vii) of Chart's Disclosure Schedule, and (iii) for other changes that are required by applicable law. (viii) ENVIRONMENTAL. Foreclose upon or take a deed or title to any commercial real estate without first conducting a Phase I environmental assessment of the property or foreclose upon any commercial real estate if such environmental assessment indicates the presence of Hazardous Substance in amounts that, if such foreclosure were to occur, would be material. (ix) INSURANCE. Renew, amend or permit to expire, lapse or terminate or knowingly take any action reasonably likely to result in the creation, renewal, amendment, expiration, lapse or termination of any insurance policies referred to in Section 5.30 hereof, provided, however, that the restrictions contained in this Section 4.1(b)(ix) concerning renewal shall apply only to those insurance policies with a term greater than one (1) year or for which a fully earned premium has been or will be or is required to be paid at the commencement of the coverage period (or such renewal coverage period). (x) ACQUISITIONS. Acquire (other than by way of foreclosures or acquisitions of control in a bona fide fiduciary capacity or in satisfaction of debts previously contracted in good faith) all or any portion of the assets, business, deposits or properties of any other entity, including by merging or consolidating with, or by purchasing an equity interest in or a portion of the assets of, or by any other manner, any business or any corporation, partnership, Joint Venture, other business organization or any division thereof or any material amount of assets, other than in the ordinary course of business consistent with past practice. (xi) INVESTMENTS. Make any investment either by purchase of stock or securities, contributions to capital, property transfers, or purchase of any property or assets of any other Person other than a wholly owned Subsidiary of Chart, or commitment to make such an investment, unless otherwise permitted under Section 4.1(b)(xix). (xii) CAPITAL EXPENDITURES. Make any capital expenditures other than (i) capital expenditures in the ordinary course of business consistent with past practice in amounts not exceeding $10,000 individually or $50,000 in the aggregate and (ii) the capital expenditures set forth in Section 4.1(b)(xii) of Chart's Disclosure Schedule. (xiii) GOVERNING DOCUMENTS. Amend the Chart Charter or the Chart Bylaws or the articles of organization or bylaws (or equivalent documents) of any Subsidiary of Chart. (xiv) ACCOUNTING METHODS. Implement or adopt any change in its accounting principles, practices or methods, other than as may be required by changes in laws or regulations or GAAP. - 21 - (xv) CLAIMS. Enter into any settlement or similar agreement with respect to any action, suit, proceeding, order or investigation to which Chart or any of its Subsidiaries is or becomes a party after the date of this Agreement, which settlement, agreement or action involves payment by Chart and its Subsidiaries of an amount that exceeds $5,000 individually or $25,000 in the aggregate and/or would impose any material restriction on the business of Chart. (xvi) DERIVATIVES CONTRACTS. Enter into any Derivatives Contract, except in the ordinary course of business consistent with past practice. (xvii) INDEBTEDNESS. Become responsible for the obligations of any other Person (excluding endorsements of checks in the ordinary course of business) or incur any indebtedness for borrowed money, other than deposits, federal funds purchased, cash management accounts, borrowings from the Federal Home Loan Bank of Boston, secured letters of credit, signature medallion guarantee activities (within insurance limits) and securities sold under agreements to repurchase, in each case in the ordinary course of business consistent with past practice. (xviii) LENDING. Other than in the ordinary course of business and consistent with existing lending policies and practices, make any commercial, commercial real estate, or commercial and industrial loan. (xix) INVESTMENT SECURITIES PORTFOLIO. Other than in the ordinary course of business, restructure or materially change its investment securities portfolio or its gap position, through purchases, sales or otherwise, or the manner in which the portfolio is classified or reported. (xx) REAL ESTATE. Make any new or additional equity investment in real estate or commitment to make any such an investment or in any real estate development project, other than (i) in connection with foreclosures, settlements in lieu of foreclosure or troubled loan or debt restructurings in the ordinary course of business consistent with past practice, or (ii) as required by agreements or instruments in effect as of the date hereof. (xxi) LOAN AND INVESTMENT POLICIES. Change in any material respect its loan or investment policies and procedures, except as required by regulatory authorities. (xxii) LEASES. Enter into or renew, amend or terminate, or give notice of a proposed renewal, amendment or termination of or make any commitment with respect to (i) any lease, license, contract, agreement or commitment for office space, operations space or branch space, regardless of where located or to be located, to which Chart or any of its Subsidiaries is, or may be, a party or by which Chart or any of its Subsidiaries or their respective properties is bound, other than in the ordinary course and consistent with past practices, or (ii) regardless of whether in the ordinary course or consistent with past practices, any such lease, license, contract, agreement or commitment involving an aggregate payment by or to Chart or any of its Subsidiaries of more than $10,000 or having a term of one year or more from the date of execution, other than as set forth in Section 4.1(b)(xxii) of Chart's Disclosure Schedule. - 22 - (xxiii) DEFAULTS. Commit any act or omission that constitutes a material breach or default by Chart or any of its Subsidiaries under any agreement with any Governmental Authority or under any material contract or material license to which any of them is a party or by which any of them or their respective properties is bound. (xxiv) ADVERSE ACTIONS. (1) Take any action that would, or is reasonably likely to, prevent or impede the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code, or (2) take any action that is intended or is reasonably likely to result in (x) any of its representations and warranties set forth in this Agreement being or becoming untrue in any material respect at any time at or prior to the Effective Time, (y) any of the conditions to the Merger set forth in Article VIII not being satisfied or (z) a material violation of any provision of any Transaction Document, except, in each case, as may be required by applicable law or regulation. (xxv) COMMITMENTS. Enter into any contract with respect to, or otherwise agree or commit to do, any of the foregoing. 4.2. PARACHUTE PAYMENTS. Notwithstanding anything to the contrary contained in this Agreement, in no event shall Chart or any of its Subsidiaries take any action or make any payments that could result, in the reasonable opinion of Bancorp or its professional advisors, either individually or in the aggregate, in the payment of an "excess parachute payment" within the meaning of Section 280G of the Code or that could result, in the reasonable opinion of Bancorp or its professional advisors, either individually or in the aggregate, in payments that would be nondeductible pursuant to Section 162(m) of the Code. 4.3. AGREEMENTS OF BANCORP. From the date hereof until the Effective Time, Bancorp will operate in the ordinary course of business consistent with past practice. In addition, except as expressly contemplated or permitted by this Agreement, without the prior written consent of Chart's Authorized Representative, Bancorp will not, and will cause each of its Subsidiaries not to (1) take any action that would, or is reasonably likely to, prevent or impede the Conversion from qualifying as a reorganization within the meaning of Section 368(a) of the Code that is wholly tax-free for Bancorp and its subsidiaries and affiliates, and the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code, that is wholly tax-free for Bancorp and Chart and their respective subsidiaries, affiliates and shareholders (except for tax imposed on Chart's shareholders with respect to the cash consideration received by them); (2) take any action that is intended or is reasonably likely to result in (w) any materially adverse impact on Bancorp's ability to perform its covenants and agreements under this Agreement, (x) any of its representations and warranties set forth in this Agreement being or becoming untrue in any material respect at any time at or prior to the Effective Time, (y) any of the conditions to the Merger set forth in Article VIII not being satisfied or (z) a material violation of any provision of any Transaction Document except, in each case, as may be required by applicable law or regulation, (3) take any action that would materially adversely affect or materially delay the ability of Bancorp or any of its Subsidiaries to obtain any necessary approvals of any Governmental Authority required for the transactions contemplated hereby or to perform its covenants and agreements under any Transaction Document; (4) acquire or agree to acquire any business or any Person (by merger or consolidation, asset purchase, purchase of equity securities or by any other manner), or otherwise acquire or agree to acquire any assets, - 23 - except (I) in the ordinary course of business consistent with past practice and (II) for such acquisition that would not reasonably be expected to prevent, impede or materially delay the consummation of the transactions contemplated by the Transaction Documents; (5) change in any material respect its accounting methods (or underlying assumptions), principles or practices affecting its assets, liabilities or business, including any reserving, renewal or residual method, practice or policy, in each case, in effect on the date hereof, except as required by changes in GAAP or regulatory accounting principles; (6) agree or consent to any agreement or modifications of existing agreements with any Governmental Authority in respect of the operations of its business, except (A) as required by law, (B) to effect the consummation of the transactions contemplated by the Transaction Documents, or (C) as would not reasonably be expected to have a Material Adverse Effect; or (7) enter into any contract with respect to, or otherwise agree or commit to do, any of the foregoing; provided that nothing herein shall preclude Bancorp from amending its Charter and Bylaws or adopting various compensation and benefit plans, contracts and policies in connection with the Conversion and further provided that the Conversion shall be considered to be in the ordinary course of business of Bancorp. ARTICLE V. REPRESENTATIONS AND WARRANTIES OF CHART Except as Previously Disclosed, Chart hereby represents and warrants to Bancorp: 5.1. ORGANIZATION, STANDING AND AUTHORITY. Chart is a co-operative bank in stock form duly organized and validly existing under the laws of The Commonwealth of Massachusetts. Chart is duly qualified to do business and is in corporate good standing in each jurisdiction where its ownership or leasing of property or assets or the conduct of its business requires it to be so qualified, except when the failure to be so licensed or in good standing would not result in a Material Adverse Effect. Chart has in effect all federal, state, local and foreign governmental authorizations necessary for it to own, operate or lease its properties and assets and to carry on its business as now conducted. The deposit accounts of Chart are insured by the Bank Insurance Fund of the FDIC and the Share Insurance Fund of the Co-operative Central Bank of Massachusetts in the manner and to the maximum extent provided by applicable law and except as set forth in Section 5.1 of Chart's Disclosure Schedule, and Chart has paid all deposit insurance premiums and assessments required by applicable laws and regulations. Chart is not obligated to make any payments for premiums and assessments, and it has filed all reports required by the FDIC. Chart does not have any deposits insured by the SAIF. As of the date hereof, no proceedings for the revocation or termination of Chart's deposit insurance are pending or, to the best knowledge of Chart, threatened. The Chart Charter and the Chart Bylaws, copies of which have previously been made available to Bancorp, are true, complete and correct copies of such documents in effect as of the date of this Agreement. Chart is not in violation of any provision of the Chart Charter or Chart Bylaws. The minute books of Chart contain in all material respects true and accurate records of all meetings held and corporate actions taken since January 1, 2001 of Chart's stockholders and Board (including committees of Chart's Board) other than minutes that have not been prepared as of the date hereof. 5.2. CHART CAPITAL STOCK. The authorized capital stock of Chart consists solely of 3,000,000 shares of Series A Chart Common Stock, of which 1,420,000 shares are outstanding as of the date hereof, 3,000,000 shares of Series B Chart Common Stock, of which no shares are - 24 - outstanding and 3,000,000 shares of Chart Preferred Stock, of which no shares are outstanding. As of the date hereof, no shares of Chart Common Stock were held in treasury by Chart. Except for DPC Shares, no shares of Chart Common Stock are held by Chart's Subsidiaries. The outstanding shares of Chart Common Stock have been duly authorized and validly issued and are fully paid and non-assessable, and except as set forth in Section 5.2 of Chart's Disclosure Schedule, free of preemptive rights, with no personal liability attaching to the ownership thereof, and none of the outstanding shares of Chart Common Stock have been issued in violation of the preemptive rights of any Person. Section 5.2 of Chart's Disclosure Schedule sets forth for each Chart Option, the name of the grantee, the date of the grant, the status of the option grant as qualified or non-qualified under Section 422 of the Code, the number of shares of Chart Common Stock subject to each option, the number of shares of Chart Common Stock subject to options that are currently exercisable and the exercise price per share. Except as set forth in the preceding sentence, there are no shares of Chart Stock reserved for issuance, Chart does not have any Equity Interests issued or outstanding with respect to Chart Stock, and Chart does not have any commitment to authorize, issue or sell any Chart Stock or Equity Interests. There are no outstanding contractual obligations of Chart to repurchase, redeem or otherwise acquire any shares of capital stock of, or other Equity Interests in, Chart or to provide funds to, or make any investment (in the form of a loan, capital contribution or otherwise) in, any Subsidiary of Chart. Except as set forth in Section 5.2 of Chart's Disclosure Schedule, there are no shares of Chart Common Stock outstanding that are subject to vesting over time or upon the satisfaction of any condition precedent, or that are otherwise subject to any right or obligation of repurchase or redemption on the part of Chart. 5.3. SUBSIDIARIES. (a) (1) Chart has Previously Disclosed a list of all of its Subsidiaries together with the jurisdiction of organization of each such Subsidiary and the percentage and type of equity security owned or controlled by Chart, (2) Chart owns, directly or indirectly, all the issued and outstanding equity securities of each of its Subsidiaries, all of which are duly authorized, validly issued, fully paid, nonassessable and free of preemptive rights, with no personal liability attaching to the ownership thereof, (3) no equity securities of any of its Subsidiaries are or may become required to be issued (other than to Chart) by reason of any Equity Interest or otherwise, (4) there are no contracts, commitments, understandings or arrangements by which any of its Subsidiaries is or may be bound to sell or otherwise transfer any of its equity securities (other than to Chart or any of its wholly-owned Subsidiaries), (5) there are no contracts, commitments, understandings, or arrangements relating to Chart's rights to vote or to dispose of such securities, (6) all the equity securities of Chart's Subsidiaries held by Chart or its Subsidiaries are fully paid and nonassessable and are owned by Chart or its Subsidiaries free and clear of any Liens and (7) there are no outstanding contractual obligations of any Subsidiary of Chart to repurchase, redeem or otherwise acquire any shares of capital stock of, or other equity interests in, Chart or any such Subsidiary or to provide funds to, or make any investment (in the form of a loan, capital contribution or otherwise) in, any such Subsidiary of Chart. (b) Except for securities and other interests held in a fiduciary capacity and beneficially owned by third parties or taken in consideration of debts previously contracted and except as set forth in Section 5.3(b) of Chart's Disclosure Schedule, Chart does not own beneficially, directly or indirectly, any equity securities or similar interests of any Person or any interest in a - 25 - partnership or Joint Venture of any kind other than its Subsidiaries and stock in the Federal Home Loan Bank of Boston. (c) Each of Chart's Subsidiaries has been duly organized and is validly existing in good standing under the laws of the jurisdiction of its organization and is duly qualified to do business and in good standing in the jurisdictions where its ownership or leasing of property or the conduct of its business requires it to be so qualified, except when the failure to be so licensed or in good standing would not result in a Material Adverse Effect. (d) The Articles of Organization and Bylaws or equivalent organizational documents of each of Chart's Subsidiaries, copies of which have previously been made available to Bancorp, are true, correct and complete copies of such documents in effect as of the date of this Agreement. Neither Chart nor any of its Subsidiaries is in violation of any provision of its Articles of Organization, Bylaws or equivalent organizational documents. The minute books of each of Chart's Subsidiaries contain in all material respects true and accurate records of all meetings held and corporate actions taken since January 1, 2001 of its stockholders and board of directors (including committees of its board of directors) other than minutes that have not been prepared as of the date hereof. 5.4. CORPORATE POWER. Each of Chart and its Subsidiaries has the requisite corporate power and authority to carry on its business as it is now being conducted and to own, lease or operate all its properties and assets; and Chart has the requisite corporate power and authority to execute, deliver and perform its obligations under the Transaction Documents to which it is or will be a party and to consummate the transactions contemplated hereby and thereby, subject to receipt of all necessary approvals of Governmental Authorities and the approval of this Agreement by the holders of not less than two-thirds of the outstanding shares of Chart Common Stock. 5.5. CORPORATE AUTHORITY. Subject to the approval of this Agreement by the holders of not less than two-thirds of the outstanding shares of Chart Common Stock, this Agreement and the transactions contemplated hereby have been authorized by all necessary corporate action of Chart and Chart Board on or prior to the date hereof. The execution and delivery of this Agreement and the other Transaction Documents, and the consummation of the transactions contemplated hereby and thereby have been declared advisable by, and have been duly and validly approved by the vote of, the Chart Board. The Chart Board (i) has directed that this Agreement and the transactions contemplated hereby, including the Merger, be submitted to the stockholders of Chart for approval at a meeting of such stockholders and (ii) has recommended that the stockholders of Chart approve this Agreement and the transactions contemplated hereby. Chart has duly executed and delivered this Agreement and, assuming due authorization, execution and delivery by Bancorp and Bancorp Bank, each of this Agreement and the other Transaction Documents to which Chart is (or will be) a party is (or will be) a valid and legally binding obligation of Chart, enforceable in accordance with its terms (except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and similar laws of general applicability relating to or affecting creditors' rights or by general equity principles). 5.6. REGULATORY APPROVALS; NO DEFAULTS. - 26 - (a) Except as set forth in Section 5.6 of Chart's Disclosure Schedule, no consents or approvals of, or waivers by, or filings or registrations with, any Governmental Authority or with any third party are required to be made or obtained by Chart or any of its Subsidiaries in connection with the execution, delivery or performance by Chart of this Agreement and the other Transaction Documents to which Chart or such Chart Subsidiary is (or will be) a party, as applicable, or to consummate the Transactions and the other transactions contemplated hereby and thereby, except for (A) filings of applications or notices with, and approvals or waivers by, the Federal Reserve Board, FDIC, the Massachusetts Bank Commissioner, the Co-operative Central Bank and the MHPF, as required, (B) filings with the SEC and state securities authorities in connection with the issuance of Bancorp Common Stock in the Merger and the solicitation of proxies from Chart's shareholders for approval of the Merger, (C) the filing of Articles of Merger with the Secretary of State of the Commonwealth of Massachusetts, (D) the approval of this Agreement by the holders of not less than two-thirds of the outstanding shares of Chart Common Stock and (E) such corporate approvals and such consents or approvals of, or waivers by, or filings or registrations with, certain of the foregoing federal and state banking agencies in connection with the Merger. As of the date hereof, Chart is not aware of any reason why the approvals set forth above or referred to in Section 8.1(c) will not be received in a timely manner and without the imposition of a condition, restriction or requirement of the type described in Section 8.1(c) or that the requisite approval of Chart's stockholders will not be obtained. (b) Subject to receipt of the approvals referred to in Section 5.6(a), and the expiration of related waiting periods, the execution, delivery and performance of this Agreement and the other Transaction Documents to which Chart is (or will be) a party by Chart, and the consummation of the Transactions and the other transactions contemplated hereby and thereby do not and will not (A) constitute a breach or violation of, or a default under (or, with notice or lapse of time, or both, would constitute a default under), or give rise to any Lien, any acceleration of remedies or performance or any right of termination under, any law, rule or regulation or any judgment, decree, order, governmental permit or license, or agreement, indenture, note, bond, mortgage, deed of trust, lease or instrument of Chart or any of its Subsidiaries or to which Chart or any of its Subsidiaries or any of their respective properties or assets is subject, affected or bound (whether as issuer, guarantor, obligor or otherwise), (B) constitute a breach or violation of, or a default under, the articles of organization or bylaws (or similar governing documents) of Chart or any of its Subsidiaries or (C) require any consent or approval under any such law, rule, regulation, judgment, decree, order, governmental permit or license, agreement, indenture, note, bond, mortgage, deed of trust, lease or instrument. 5.7. CHART FINANCIAL STATEMENTS. (a) Chart has previously furnished to Bancorp true, correct and complete copies of Chart's audited consolidated balance sheets as of December 31, 2001, 2002, and 2003, and the related consolidated statements of income, changes in stockholders equity and statements of cash flows for the years then ended, together with related notes of such financial statements (all the foregoing financial statements are referred to collectively as the "CHART AUDITED FINANCIAL STATEMENTS"). The Chart Audited Financial Statements are prepared in accordance with GAAP applied on a consistent basis throughout the periods indicated and present fairly the financial condition and results of operations of Chart as of their respective dates and for the periods indicated thereon. - 27 - (b) Chart has provided to Bancorp true and correct copies of Chart's unaudited consolidated balance sheets as of June 30, 2004 and the related unaudited consolidated statement of income for the six months ended June 30, 2003 and 2004 (the foregoing financial statements are referred to collectively as the "CHART INTERIM FINANCIAL STATEMENTS"). The Chart Interim Financial Statements present fairly the financial condition and results of operations of Chart for the periods indicated thereon and are prepared in accordance with GAAP (except for the omission of notes to the Chart Interim Financial Statements and year-end adjustments to interim results, which adjustments will not be material) applied on a consistent basis with all prior periods and throughout the periods indicated. (c) Chart has provided to Bancorp true and complete copies of all quarterly Consolidated Reports of Condition and Income ("CALL REPORTS") as filed with the FDIC since December 31, 2003 through and including June 30, 2004. Such Call Reports were prepared in accordance with the FDIC's instructions and fairly present the information purported to be shown therein. (d) The Chart Audited Financial Statements and the Chart Interim Financial Statements are herein referred to together as the "CHART FINANCIAL STATEMENTS." (e) Each of the balance sheets included in any Chart Financial Statement sent to Chart shareholders or filed with the FDIC with respect to any period subsequent to the year ended December 31, 2003 (including any related notes and schedules), does or will fairly present the consolidated financial position of Chart as of its date, and the other financial statements included therein (including any related notes and schedules) do or will fairly present the consolidated results of operations or other information included therein of Chart for the periods or as of the dates therein set forth, subject to the notes thereto, in each case in accordance with generally accepted accounting principles and auditing standards, and do or will reflect all of its assets, liabilities and accruals and all of its items of income and expense in accordance with such principles consistently applied during the periods involved. 5.8. CHART REPORTS. Since January 1, 2001, Chart and its Subsidiaries have timely filed, and subsequent to the date hereof will timely file, all reports, registrations and statements, together with any amendments required to be made with respect thereto, that were and are required to be filed with (i) the FDIC and (ii) any applicable state securities or banking authorities (except, in the case of state securities authorities, no such representation is made as to filings that are not material) (all such reports, registrations and statements, together with any amendments thereto and the Chart Financial Statements, are collectively referred to herein as the "CHART REPORTS") and have paid all fees and assessments due and payable in connection with any of the foregoing. As of the date filed or to be filed and as amended prior to the date hereof, Chart Reports complied and, with respect to filings made after the date of this Agreement, will at the date of filing comply, in all material respects with all of the statutes, rules and regulations enforced or promulgated by the regulatory authority with which they were filed. Except for normal periodic examinations conducted by a Bank Regulator in the regular course of the business of Chart and its Subsidiaries, since January 1, 2001, no Bank Regulator has initiated any proceeding or, to the best knowledge of Chart, investigation into the business or operations of Chart or any of its Subsidiaries. Except as set forth on Section 5.8 of Chart's Disclosure Schedule, Chart and its Subsidiaries have resolved all material violations, criticisms or - 28 - exceptions by any Bank Regulator with respect to any such normal periodic examination. 5.9. ABSENCE OF UNDISCLOSED LIABILITIES. Except for those liabilities that are appropriately reflected or reserved against in the balance sheets of the Chart Reports and for liabilities incurred in the ordinary course of business consistent with past practice or in connection with this Agreement or the transactions contemplated hereby, since January 1, 2004, neither Chart nor any of its Subsidiaries has incurred any obligation or liability (contingent or otherwise) that, either alone or when combined with all similar liabilities, has had, or could reasonably be expected to have, a Material Adverse Effect on Chart. 5.10. ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 31, 2003, except as set forth in Section 5.10 of Chart's Disclosure Schedule or reflected in the Chart Reports, there has not been (a) either individually or in the aggregate, any Material Adverse Effect and, to the best knowledge of Chart, no fact or condition exists that is reasonably likely to cause such a Material Adverse Effect in the future (assuming, for purposes of this Section 5.10 that "MATERIAL ADVERSE EFFECT" is subject to the same exclusions contained in Section 8.3(g)((1)-(5)), (b) any material damage, destruction or loss with respect to any property or asset of Chart or any of its Subsidiaries, (c) any change by Chart or any of its Subsidiaries in its accounting methods, principles or practices, other than changes required by applicable law or GAAP or regulatory accounting as concurred in by Chart's independent accountants, (d) any revaluation by Chart or any of its Subsidiaries of any asset, including, without limitation, writing off of notes or accounts receivable, other than in the ordinary course of business consistent with past practice, (e) any entry by Chart or any of its Subsidiaries into any contract or commitment (other than with respect to Loans, as hereinafter defined) of more than $15,000 or with a term of more than one (1) year that is not terminable without penalty, other than in the ordinary course of business consistent with past practice, (f) any declaration, setting aside or payment of any dividend or distribution in respect of any capital stock of Chart or any of its Subsidiaries or any redemption, purchase or other acquisition of any of such securities, (g) any increase in or establishment of any bonus, insurance, severance, deferred compensation, pension, retirement, profit sharing, stock option (including, without limitation, the granting of stock options, stock appreciation rights, performance awards, or restricted stock awards), stock purchase or other employee benefit plan, or any other increase in the compensation payable or to become payable to any directors, officers or employees of or consultants to Chart or any of its Subsidiaries, or any grant of severance or termination pay, or any contract or arrangement entered into to make or grant any severance or termination pay, any payment of any bonus, or the taking of any other material action not in the ordinary course of business with respect to the compensation or employment of directors, officers or employees of or consultants to Chart or any of its Subsidiaries, (h) any strike, work stoppage, slowdown or other labor disturbance, (i) any material election made by Chart or any of its Subsidiaries for federal or state income tax purposes, (j) any change in the credit policies or procedures of Chart or any of its Subsidiaries, the effect of which was or is to make any such policy or procedure materially less restrictive in any material respect, (k) any material liability or obligation of any nature (whether accrued, absolute, contingent or otherwise and whether due or to become due), including without limiting the generality of the foregoing, liabilities as guarantor under any guarantees or liabilities for taxes, other than in the ordinary course of business consistent with past practice, (l) any forgiveness or cancellation of any indebtedness or contractual obligation other than in the ordinary course of business consistent with past practice, (m) any mortgage, pledge, lien or lease of any assets, tangible or intangible, of - 29 - Chart or any of its Subsidiaries with a value in excess of $25,000 in the aggregate, except with respect to (i) funds borrowed by Chart or any of its Subsidiaries from the Federal Home Loan Bank, (ii) as required in connection with banking services for governmental agencies (including without limitation municipal deposits) or (iii) as required in connection with borrowing or other activities involving the Federal Reserve Bank of Boston, in each case in the ordinary course of business and in amounts and with terms consistent with past practice, (n) any acquisition or disposition of any assets or properties having a value in excess of $50,000, or any contract for any such acquisition or disposition entered into other than loans and investment securities, (o) any lease of real or personal property entered into, other than in connection with foreclosed property or in the ordinary course of business consistent with past practice. 5.11. LITIGATION. There is no claim, suit, action, proceeding or investigation of any nature pending or, to the best knowledge of Chart, threatened, against Chart or any Subsidiary of Chart or challenging the validity or propriety of the transactions contemplated by this Agreement, nor is there any judgment, decree, injunction, rule, award or order of any legal or administrative body or arbitrator outstanding against Chart or any Subsidiary of Chart having, or that insofar as reasonably can be foreseen, in the future could have, any such effect or restricting, or that could restrict, its ability to conduct business in any material respect in any area. Chart is not aware of any facts that could reasonably give rise to any such claim, suit, action, investigation or other proceeding. 5.12. REGULATORY MATTERS. (a) Neither Chart nor any of its Subsidiaries nor any of any of their respective properties is a party to or is subject to any order, decree, agreement, memorandum of understanding or similar arrangement with, or a commitment letter or similar submission to, order to cease and desist with, or extraordinary supervisory letter from, any federal or state governmental agency or authority charged with the supervision or regulation of financial institutions or issuers of securities or engaged in the insurance of deposits or the supervision or regulation of it (collectively, the "CHART REGULATORY AUTHORITIES"), or is subject to any order or directive specifically naming or referring to Chart or any of its Subsidiaries by, has been required to adopt any board resolution by, any Chart Regulatory Authority that is currently in effect, and neither Chart nor any of its Subsidiaries has received written notification from any such Chart Regulatory Authority that any such Person may be requested to enter into, or otherwise be subject to, any such commitment letter, written agreement, memorandum of understanding, cease and desist order or any other similar order or directive. Except as set forth in Section 5.12(a) of Chart's Disclosure Schedule, neither Chart nor any of its Subsidiaries is a party to any agreement or arrangement entered into in connection with the consummation of a federally assisted acquisition of a depository institution pursuant to which Chart or any of its Subsidiaries is entitled to receive financial assistance or indemnification from any Governmental Authority. Chart and its Subsidiaries have paid all assessments made or imposed by any Chart Regulatory Authority. (b) Neither Chart nor any its Subsidiaries has been advised by, or has any knowledge of facts that would reasonably be expected to give rise to an advisory notice by, any Chart Regulatory Authority that such Chart Regulatory Authority is contemplating issuing or requesting (or is considering the appropriateness of issuing or requesting) any such order, decree, - 30 - agreement, memorandum of understanding, commitment letter, supervisory letter or similar submission. 5.13. COMPLIANCE WITH LAWS. Each of Chart and its Subsidiaries: (a) is in material compliance with all applicable federal, state, local and foreign statutes, laws, regulations, ordinances, rules, judgments, orders or decrees applicable thereto or to the employees conducting such businesses, including, without limitation, the Equal Credit Opportunity Act, the Fair Housing Act, the Community Reinvestment Act, the Home Mortgage Disclosure Act and all other applicable fair lending laws and other laws relating to discriminatory business practices; (b) has all permits, licenses, franchises, authorizations, orders and approvals of, and has made all filings, applications and registrations with, all Governmental Authorities that are required in order to permit them to own or lease their properties and to conduct their businesses as presently conducted; all such permits, licenses, certificates of authority, orders and approvals are in full force and effect and, to Chart's knowledge, no suspension or cancellation of any of them is threatened; and (c) has received, since December 31, 2000, no notification or communication from any Governmental Authority (A) asserting that Chart or any of its Subsidiaries is not in material compliance with any of the statutes, regulations or ordinances that such Governmental Authority enforces or (B) threatening to revoke any license, franchise, permit or governmental authorization (nor, to Chart's knowledge, do any grounds for any of the foregoing exist). 5.14. MATERIAL CONTRACTS; DEFAULTS. (a) Except as set forth on Section 5.14 of Chart's Disclosure Schedule, neither Chart nor any of its Subsidiaries is a party to, bound by or subject to any agreement, contract, arrangement, commitment or understanding (whether written or oral): (i) that would be a "MATERIAL CONTRACT" within the meaning of Item 601(b)(10) of the SEC's Regulation S-K; (ii) that materially restricts the conduct of business by Chart or by any of its Subsidiaries; (iii) that is material to the financial condition, results of operations or business of Chart, except those entered into in the ordinary course of business; (iv) relating to the employment, including without limitation, employment as a consultant, of any person, or the election or retention in office, or severance of any present or former director or officer of Chart or any of its Subsidiaries; (v) with any labor union; (vi) by and among Chart, any Subsidiary of Chart and/or any affiliate thereof; - 31 - (vii) that, upon the consummation of the transactions contemplated by this Agreement or the other Transaction Documents, will result in any payment (whether of severance pay or otherwise) becoming due from Chart or any of its Subsidiaries to any officer or employee thereof; (viii) requiring that a particular line of business be maintained; (ix) that is a consulting or other agreement (including agreements entered into in the ordinary course and data processing, software programming and licensing contracts) not terminable without penalty on sixty (60) days or less notice involving the payment of more than $20,000 per annum; (x) except for the Chart Stock Option Plan, any of the benefits of which will be increased, or the vesting of the benefits of which will be accelerated, by the occurrence of any of the transactions contemplated by any Transaction Document, or the value of any of the benefits of which will be calculated on the basis of any of the transactions contemplated by any Transaction Document; (xi) that purports to limit in any respect, the ability of Chart or its businesses to solicit customers or the manner in which, or the localities in which, all or any substantial portion of the business of Chart and its Subsidiaries, taken as a whole, or, following consummation of the transactions contemplated by any Transaction Document, Bancorp and its Subsidiaries, is or would be conducted; (xii) providing for the indemnification by Chart or a subsidiary of Chart of any person, other than customary agreements relating to the indemnity of directors, officers and employees of Chart or its Subsidiaries; (xiii) that is a Joint Venture or partnership agreement; (xiv) that grants any right of first refusal or right of first offer or similar right or that limits (or purports to limit) the ability of Chart or any of its Subsidiaries to own, operate, sell, transfer, pledge or otherwise dispose of any material amount of assets or business; (xv) providing for any material future payments that are conditioned, in whole or in part, on a change of control of Chart or any of its Subsidiaries; (xvi) that contains a "most favored nation" clause; (xvii) pertaining to the use of or granting any right to use or practice any rights under any Chart intellectual property assets, whether Chart or any of its Subsidiaries is the licensee or licensor thereunder; or (xviii) that is an investment management or investment advisory or sub-advisory or any other contract for the provision of financial planning, brokerage (including, without limitation, insurance brokerage) or similar services not terminable on sixty (60) days or less notice. - 32 - (b) Neither Chart nor any of its Subsidiaries is in material default under any contract, agreement, commitment, arrangement, lease, insurance policy or other instrument to which it is a party, by which its respective assets, business, or operations may be bound or affected, or under which it or its respective assets, business, or operations receives benefits, and there has not occurred any event that, with the lapse of time or the giving of notice or both, would constitute such a default. No power of attorney or similar authorization given directly or indirectly by Chart or any of its Subsidiaries is currently outstanding. 5.15. NO BROKERS. Excluding a Previously Disclosed arrangement with and fee paid or payable to Ryan Beck & Co. LLC, neither Chart nor any of its officers, directors, employees, affiliates or agents has employed any broker, finder or financial advisor or incurred any liability for any fees or commissions in connection with any of the transactions contemplated by this Agreement except for legal, accounting and other professional fees payable in connection with the Merger and the other transactions contemplated hereby. Chart will be responsible for the payment of all such fees. The fee payable to Ryan Beck & Co. LLC in connection with the transactions contemplated by this Agreement is as described in an engagement letter between Chart and Ryan Beck & Co. LLC, a true and complete copy of which has heretofore been furnished to Bancorp. 5.16. EMPLOYEE BENEFIT PLANS. (a) All benefit and compensation plans, contracts, policies or arrangements covering current or former employees of Chart and its Subsidiaries and current or former directors of Chart including, but not limited to, "employee benefit plans" within the meaning of Section 3(3) of ERISA, and deferred compensation, stock option, stock purchase, stock appreciation rights, stock based, incentive and bonus plans (the "CHART BENEFIT PLANS"), are Previously Disclosed in the Disclosure Schedule. True and complete copies of all Benefit Plan documents and summary plan descriptions, the most recent determination letter received from the Internal Revenue Service, the most recent annual report (Form 5500, with all applicable attachments), and all related trust instruments, insurance contracts, and other funding arrangements, forming a part of any Benefit Plans and all amendments thereto have been provided or made available to Bancorp. (b) All Chart Benefit Plans are in substantial compliance with ERISA, the Code, and other applicable laws in all material respects. Except as set forth in Section 5.16 of Chart's Disclosure Schedule, each Chart Benefit Plan that is an "employee pension benefit plan" within the meaning of Section 3(2) of ERISA ("PENSION PLAN") and that is intended to be qualified under Section 401(a) of the Code, has received a favorable determination letter from the Internal Revenue Service, and Chart is not aware of any circumstances likely to result in revocation of any such favorable determination letter or the loss of the qualification of such Pension Plan under Section 401(a) of the Code. There is no material pending or, to Chart's knowledge, threatened litigation relating to the Chart Benefit Plans. Neither Chart nor any of its Subsidiaries has engaged in a transaction with respect to any Chart Benefit Plan or Pension Plan that could subject Chart or any of its Subsidiaries to a tax or penalty imposed by either Section 4975 of the Code or Section 502(i) of ERISA in an amount that would be material. (c) All contributions required to be made under the terms of any Chart Benefit Plan have been timely made or have been reflected on the financial statements of Chart included in - 33 - the Chart Reports. (d) Neither Chart, nor any of its Subsidiaries, or any ERISA Affiliate, has incurred any liability under Title IV of ERISA that will not have been paid in full prior to the Closing. Neither Chart nor any of its Subsidiaries or any ERISA Affiliate currently maintains any Pension Plan subject to Code Section 412 or ERISA Section 302, and Chart has received approval from the Pension Benefit Guaranty Corporation with regard to the termination of its defined benefit Pension Plan. Neither Chart, nor any of its Subsidiaries, or any ERISA Affiliate has ever maintained a Multiemployer Plan. (e) There are no pending or, to the knowledge of Chart, threatened claims by or on behalf of any Chart Benefit Plan, or by or on behalf of any individual participants or beneficiaries of any Benefit Plan, alleging any breach of fiduciary duty on the part of Chart or any of its officers, directors or employees under ERISA or any other applicable regulations, or claiming benefit payments for which Chart may be liable (other than those made in the ordinary operation of such plans), nor is there, to the knowledge of Chart, any basis for such claim. The Chart Benefit Plans are not the subject of any pending (or to the knowledge of Chart, any threatened) investigation or audit by the Internal Revenue Service, the Department of Labor or the Pension Benefit Guaranty Corporation. (f) With respect to any Chart Benefit Plan that is a Welfare Plan and except as Previously Disclosed, (i) each Welfare Plan for which contributions are claimed by Chart as deductions under any provision of the Code is in material compliance with all applicable requirements pertaining to such deduction, (ii) any Chart Benefit Plan that is a group health plan (within the meaning of Section 4980B(g)(2) of the Code) complies, and in each and every case has complied, with all of the applicable material requirements of Section 4980B of the Code, ERISA, Title XXII of the Public Health Service Act and the Social Security Act, and (iii) all Welfare Plans may be amended or terminated at any time on or after the Closing Date without incurring any liability thereunder. (g) Neither Chart nor any of its Subsidiaries has any obligations for retiree health and life benefits under any Chart Benefit Plan, other than coverage as may be required under Section 4980B of the Code or Part 6 of Title I of ERISA, or under the continuation of coverage provisions of the laws of any state or locality. (h) Neither Chart nor any of its Subsidiaries is a party to any agreement, contract, arrangement or plan that has resulted or would result, separately or in the aggregate, in the payment of (i) any "excess parachute payment" within the meaning of Code Section 280G (or any corresponding provision of state, local or foreign Tax law) or (ii) any amount that will not be fully deductible as a result of Code Section 162(m) (or any corresponding provision of state, local or foreign Tax law). Except as contemplated by the Transaction Documents, none of the execution of this Agreement, shareholder approval of this Agreement or consummation of the transactions contemplated by this Agreement will (A) entitle any employees of Chart or any of its Subsidiaries to severance pay or any increase in severance pay upon any termination of employment after the date hereof, (B) accelerate the time of payment or vesting or trigger any payment or funding (through a grantor trust or otherwise) of compensation or benefits under, increase the amount payable or trigger any other material obligation pursuant to, any of the Chart - 34 - Benefit Plans, (C) result in any breach or violation of, or a default under, any of the Chart Benefit Plans, (D) result in any payment that would be a "parachute payment" to a "disqualified individual" as those terms are defined in Section 280G of the Code, without regard to whether such payment is reasonable compensation for personal services performed or to be performed in the future or (E) result in any payment that would be nondeductible pursuant to Section 162(m) of the Code. 5.17. LABOR MATTERS. Neither Chart nor any of its Subsidiaries is a party to or is bound by any collective bargaining agreement, contract or other agreement or understanding with a labor union or labor organization, nor is Chart or any of its Subsidiaries the subject of a proceeding asserting that it has committed an unfair labor practice (within the meaning of the National Labor Relations Act) or seeking to compel Chart or any of its Subsidiaries to bargain with any labor organization as to wages or conditions of employment, nor is there any strike, work stoppage or other labor dispute, arbitration, lawsuit or administrative proceeding involving it or any of its Subsidiaries pending or, to Chart's knowledge, threatened, nor is Chart or any of its Subsidiaries aware of any activity involving its employees seeking to certify a collective bargaining unit or engaging in other organizational activity. No employees of Chart or any of its Subsidiaries are represented by any labor union. 5.18. ENVIRONMENTAL MATTERS. (a) Chart and its Subsidiaries are in material compliance with applicable Environmental Laws; (b) to Chart's knowledge, no real property (including buildings or other structures) currently or formerly owned or operated by Chart or any of its Subsidiaries, or any property in which Chart or any of its Subsidiaries has held a security interest, Lien or a fiduciary or management role ("CHART LOAN PROPERTY"), has been contaminated with, or has had any release of, any Hazardous Substance except in compliance with Environmental Laws; (c) neither Chart nor any of its Subsidiaries has participated in the management regarding Hazardous Substances of, any Chart Loan Property that has been contaminated with, or has had any release of, any Hazardous Substance except in compliance with Environmental Laws; (d) neither Chart nor any of its Subsidiaries has any material liability for any Hazardous Substance disposal or contamination on any third party property; (e) neither Chart nor any of its Subsidiaries has received any notice, demand letter, claim or request for information alleging any violation of, or liability under, any Environmental Law; (f) neither Chart nor any of its Subsidiaries is subject to any order, decree, injunction or other agreement with any Governmental Authority or any third party relating to any Environmental Law; (g) to Chart's knowledge, there are no circumstances or conditions (including the presence of asbestos, underground storage tanks, lead products, polychlorinated biphenyls, prior - 35 - manufacturing operations, dry-cleaning, or automotive services) involving Chart or any of its Subsidiaries, any currently or formerly owned or operated property, or any Chart Loan Property, that could reasonably be expected to result in any claims, liability or investigations against Chart or any of its Subsidiaries, result in any restrictions on the ownership, use, or transfer of any property pursuant to any Environmental Law, or adversely affect the value of any Chart Loan Property; and (h) Chart has delivered or, at Bancorp's request, made available to Bancorp copies of all environmental reports, studies, sampling data, correspondence, filings and other environmental information in its possession or reasonably available to it relating to Chart, its Subsidiaries and any currently or formerly owned or operated property or any Chart Loan Property. 5.19. TAX MATTERS. (a) For the taxable years ended December 31, 2003, 2002, 2001, 2000, 1999, 1998 and 1997, each of Chart and its Subsidiaries has filed all Tax Returns that it was required to file under applicable laws and regulations. All such Tax Returns were correct and complete in all material respects and have been prepared in substantial compliance with all applicable laws and regulations. All Taxes due and owing by Chart or any of its Subsidiaries (whether or not shown on any Tax Return) have been paid. Neither Chart nor any of its Subsidiaries is currently the beneficiary of any extension of time within which to file any Tax Return. No claim has ever been made by an authority in a jurisdiction where Chart or any of its Subsidiaries does not file Tax Returns that it is or may be subject to taxation by that jurisdiction. There are no Liens for Taxes (other than Taxes not yet due and payable) upon any of the assets of Chart or any of its Subsidiaries. (b) Chart and each of its Subsidiaries has withheld and paid all Taxes required to have been withheld and paid in connection with any amounts paid or owing to any employee, independent contractor, creditor, stockholder, or other third party. (c) Except as set forth on Section 5.19(c) of Chart's Disclosure Schedule, no foreign, federal, state, or local tax audits or administrative or judicial Tax proceedings are pending or being conducted with respect to Chart or any of its Subsidiaries. Neither Chart nor any of its Subsidiaries has received from any foreign, federal, state, or local taxing authority (including jurisdictions where Chart or any of its Subsidiaries has not filed Tax Returns) any (i) notice indicating an intent to open an audit or other review, (ii) request for information related to Tax matters, or (iii) notice of deficiency or proposed adjustment for any amount of Tax proposed, asserted, or assessed by any taxing authority against Chart or any of its Subsidiaries. (d) Chart has provided Bancorp with true and complete copies of the United States federal, state, local, and foreign income Tax Returns filed with respect to Chart and its Subsidiaries for taxable periods ended on or after December 31, 2000. The Disclosure Schedule indicates those Tax Returns that have been audited during the last three years, and those Tax Returns that currently are the subject of an audit. Chart has delivered to Bancorp correct and complete copies of all examination reports, and statements of deficiencies assessed against or agreed to by Chart or any of its Subsidiaries filed for the years ended on or after December 31, 2000. - 36 - (e) Neither Chart nor any of its Subsidiaries has waived any statute of limitations in respect of Taxes or agreed to any extension of time with respect to a Tax assessment or deficiency. (f) Neither Chart nor any of its Subsidiaries has filed a consent under Code Section 341(f) concerning collapsible corporations. Neither Chart nor any of its Subsidiaries has been a United States real property holding corporation within the meaning of Code Section 897(c)(2) during the applicable period specified in Code Section 897(c)(1)(A)(ii). Chart and each of its Subsidiaries has disclosed on its federal income Tax Returns all positions taken therein that could give rise to a substantial understatement of federal income Tax within the meaning of Code Section 6662. Neither Chart nor any of its Subsidiaries is a party to or bound by any Tax allocation or sharing agreement. Neither Chart nor any of its Subsidiaries (A) has been a member of an Affiliated Group filing a consolidated federal income Tax Return (other than a group the common parent of which was Chart) and (B) has any liability for the Taxes of any Person (other than Chart and its Subsidiaries) under Reg. Section 1.1502-6 (or any similar provision of state, local, or foreign law), as a transferee or successor, by contract, or otherwise. (g) Except as set forth on Section 5.19(g) of Chart's Disclosure Schedule, the unpaid Taxes of Chart and its Subsidiaries do not exceed the reserve for Tax liability (which reserve is distinct and different from any reserve for deferred Taxes established to reflect timing differences between book and Tax income) established on the books and records of Chart and its Subsidiaries. (h) Neither Chart nor any of its Subsidiaries will be required to include any item of income in, or exclude any item of deduction from, taxable income for any taxable period (or portion thereof) ending after the Closing Date as a result of any: (A) change in method of accounting for a taxable period ending on or prior to the Closing Date; (B) "closing agreement" as described in Code Section 7121 (or any corresponding or similar provision of state, local or foreign income Tax law) executed on or prior to the Closing Date; (C) intercompany transactions or any excess loss account described in Treasury Regulations under Code Section 1502 (or any corresponding or similar provision of state, local or foreign income Tax law); (D) installment sale or open transaction disposition made on or prior to the Closing Date; or (E) prepaid amount received on or prior to the Closing Date. (i) Neither Chart nor any of its Subsidiaries has distributed stock of another person, nor had its stock distributed by another person, in a transaction that was purported or intended to be governed in whole or in part by Code section 355 or Code section 361. 5.20. RISK MANAGEMENT INSTRUMENTS. Neither Chart nor any of its Subsidiaries is a party or has agreed to enter into an exchange traded or over-the-counter equity, interest rate, foreign exchange or other swap, forward, future, option, cap, floor or collar or any other contract that is not included on the balance sheet and is a derivatives contract (including various combinations thereof) (each, a "DERIVATIVES CONTRACT") or owns securities that (i) are referred to generically as "structured notes," "high risk mortgage derivatives," "capped floating rate notes" or "capped floating rate mortgage derivatives" or (ii) are likely to have changes in value as a result of non-minimal interest or exchange rate changes, except for those Derivatives Contracts and other instruments legally purchased or entered into in the ordinary course of business, consistent with - 37 - safe and sound banking practices and regulatory guidance. All of such Derivatives Contracts or other instruments, are legal, valid and binding obligations of Chart or any of its Subsidiaries enforceable in accordance with their terms (except as enforcement may be limited by general principles of equity whether applied in a court of law or a court of equity and by bankruptcy, insolvency and similar laws affecting creditors' rights and remedies generally), and are in full force and effect. Chart and its Subsidiaries have duly performed in all material respects all of their material obligations thereunder to the extent that such obligations to perform have accrued; and, to Chart's knowledge, there are no breaches, violations or defaults or allegations or assertions of such by any party thereunder that would have or would reasonably be expected to have a Material Adverse Effect on Chart. 5.21. INVESTMENT SECURITIES. Except for pledges to secure public and trust deposits, Federal Reserve borrowings, Federal Home Loan Bank advances, repurchase agreements and reverse repurchase agreements entered into in arms'-length transactions pursuant to normal commercial terms and conditions and other pledges required by law, none of the investments reflected in the balance sheet of Chart contained in its most recent Financial Statements made available to Bancorp, and none of the material investments made by Chart or any of its Subsidiaries since January 1, 2004 is subject to any restriction (contractual, statutory or otherwise) that would materially impair the ability of the entity holding such investment freely to dispose of such investment at any time. The information (including electronic information and information contained on tapes and computer disks) with respect to all investment securities (including mortgaged-backed securities) of Chart and its Subsidiaries furnished to Bancorp by Chart is, as of the respective dates indicated therein, true and correct in all material respects. 5.22. LOANS; NONPERFORMING AND CLASSIFIED ASSETS. (a) Each loan agreement, note or borrowing arrangement (whether written or oral), including without limitation portions of outstanding lines of credit, loan commitments, leases, credit enhancements and guarantees (collectively, "LOANS"), on the books and records of Chart and its Subsidiaries, was made and has been serviced in all material respects in accordance with customary lending standards in the ordinary course of business, is evidenced in all material respects by appropriate and sufficient documentation and, to the knowledge of Chart, constitutes the legal, valid and binding obligation of the obligor named therein, subject to bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and similar laws of general applicability relating to or affecting creditor's rights or by general equity principles. The information (including electronic information and information contained on tapes and computer disks) with respect to all Loans of Chart and its Subsidiaries furnished to Bancorp by Chart is, as of the respective dates indicated therein, true and correct in all material respects. To the best knowledge of Chart, all loans originated, directly or through third party mortgage brokers, have been originated in compliance with all federal, state and local laws, including without limitation, the Real Estate Settlement Procedures Act of 1974, as amended. (b) Chart has Previously Disclosed as to Chart and each Chart Subsidiary as of the latest practicable date: (i) any written or, to Chart's knowledge, oral Loan under the terms of which the obligor is 60 or more days delinquent in payment of principal or interest, or to Chart's knowledge, in default of any other material provision thereof; (ii) each Loan that has been classified as "substandard," "doubtful," "loss" or "special mention" (or words of similar import) - 38 - by Chart, a Chart Subsidiary or an applicable regulatory authority (it being understood that no representation is being made that FDIC or Staff of the Massachusetts Bank Commissioner would agree with the loan classifications established by Chart); (iii) a listing of the OREO acquired by foreclosure or by deed-in-lieu thereof, including the book value thereof; and (iv) each Loan with any director, executive officer or five percent or greater shareholder of Chart or a Chart Subsidiary, or to the best knowledge of Chart, any Person controlling, controlled by or under common control with any of the foregoing. (c) No agreement pursuant to which any loans or other assets have been or shall be sold by Chart or its Subsidiaries entitled the buyer of such loans or other assets, unless there is material breach of a representation or covenant by Chart or its Subsidiaries, to cause Chart or its Subsidiaries to repurchase such loan or other asset or the buyer to pursue any other form of recourse against Chart or its Subsidiaries. 5.23. BANK OWNED LIFE INSURANCE. Neither Chart nor any of its Subsidiaries owns any Bank Owned Life Insurance ("BOLI"). 5.24. PROPERTIES. The real and material personal property owned by Chart or a Subsidiary of Chart or presently used by any of them in its respective business is in an adequate condition (ordinary wear and tear excepted) and is sufficient to carry on its business in the ordinary course of business consistent with its past practices. Chart has good and marketable title free and clear of all Liens to all of the real and material personal properties and assets reflected on the consolidated statement of financial condition of Chart as of December 31, 2003 included in the Chart Reports or acquired after such date, other than properties sold by Chart in the ordinary course of business, except (i) Liens for current taxes and assessments not yet due or payable, (ii) pledges to secure deposits and other Liens incurred in the ordinary course of its banking business, (iii) such imperfections of title, easements and encumbrances, if any, as are not, individually or in the aggregate, material in character, amount or extent and (iv) as reflected on the consolidated statement of financial condition of Chart as of December 31, 2003 included in the Chart Reports. All real and personal property that is material to Chart's business on a consolidated basis and leased or licensed by Chart or a Subsidiary of Chart is held pursuant to leases or licenses that are valid and enforceable in accordance with their respective terms and such leases will not terminate or lapse prior to the Effective Time and there exists no material default under any such leases or licenses by Chart or any of its Subsidiaries nor, to the best knowledge of Chart and except as set forth on Section 5.24 of Chart's Disclosure Schedule, any event that with notice or lapse of time or both would constitute a material default thereunder by Chart or any other Chart Subsidiaries, except for such defaults that, individually, or in the aggregate, would not result in the forfeiture of the use or occupancy of the property covered by such lease or in a material liability to Chart. 5.25. INTELLECTUAL PROPERTY. Chart and each Subsidiary of Chart owns or possesses valid and binding licenses and other rights to use without payment of any material amount all material patents, copyrights, trade secrets, trade names, service marks and trademarks used in its businesses, all of which have been Previously Disclosed by Chart, and none of Chart or any of its Subsidiaries has received any notice of conflict with respect thereto that asserts the right of others. Chart and each Subsidiary has performed in all material respects all the obligations required to be performed by it and is not in default under any contract, agreement, arrangement - 39 - or commitment relating to any of the foregoing. 5.26. FIDUCIARY ACCOUNTS. Neither Chart nor any of its Subsidiaries engage in any trust business or administers or maintains accounts for which it acts as a fiduciary (other than individual retirement accounts and Keogh accounts), including but not limited to accounts for which it serves as a trustee, agent, custodian, personal representative, guardian, conservator or investment advisor. 5.27. CAPITALIZATION. Chart is "well capitalized," as such term is defined in the rules and regulations promulgated by the FDIC. 5.28. COMMUNITY REINVESTMENT ACT, ANTI-MONEY LAUNDERING AND CUSTOMER INFORMATION SECURITY. Chart is not aware of, has not been advised of, and has no reason to believe that any facts or circumstances exist, that would cause Chart: (i) to be deemed not to be in satisfactory compliance in any material respect with the Community Reinvestment Act, and the regulations promulgated thereunder, or to be assigned a rating for Community Reinvestment Act purposes by federal or state bank regulators of lower than "satisfactory;" or (ii) to be deemed to be operating in violation in any material respect of the federal Bank Secrecy Act, as amended, and its implementing regulations (31 C.F.R. Part 103), the USA Patriot Act of 2001, Public Law 107-56 (the "USA PATRIOT ACT"), and the regulations promulgated thereunder, any order issued with respect to anti-money laundering by the U.S. Department of the Treasury's Office of Foreign Assets Control, or any other applicable anti-money laundering statute, rule or regulation; or (iii) to be deemed not to be in satisfactory compliance in any material respect with the applicable privacy of customer information requirements contained in any federal and state privacy laws and regulations, including without limitation, in Title V of the Gramm-Leach-Bliley Act of 1999 and regulations promulgated thereunder, as well as the provisions of the information security program adopted by Chart pursuant to 12 C.F.R. Part 364. Furthermore, the Chart Board has adopted and Chart has implemented an anti-money laundering program that contains adequate and appropriate customer identification verification procedures that has not been deemed ineffective in any material respects by any Bank Regulators and that meets the requirements in all material respects of Section 352 of the USA Patriot Act and the regulations thereunder. 5.29. BOOKS AND RECORDS. The books and records of Chart and its Subsidiaries are being maintained in material compliance with applicable legal and accounting requirements, and such books and records accurately reflect in all material respects all dealings and transactions in respect of the business, assets, liabilities and affairs of Chart and its Subsidiaries. 5.30. INSURANCE. Chart has Previously Disclosed all of the material insurance policies, binders, or bonds currently maintained by Chart or any of its Subsidiaries ("INSURANCE POLICIES"). Chart and its Subsidiaries are insured with reputable insurers against such risks and in such amounts as the management of Chart reasonably has determined to be prudent in accordance with industry practices. All the Insurance Policies are in full force and effect; Chart and its Subsidiaries are not in material default thereunder and have not received any notice of cancellation with respect thereto; and all claims thereunder have been filed in due and timely fashion, and Chart and its Subsidiaries, as applicable, have timely provided such insurers with due notice of all matters that may reasonably become a claim or otherwise constitute a basis for - 40 - seeking recovery under the Insurance Policies. 5.31. ALLOWANCE FOR LOAN LOSSES. Chart's allowance for loan losses is in compliance with Chart's existing methodology for determining the adequacy of its allowance for loan losses and, to the knowledge of Chart, the standards established by applicable Governmental Authorities and the Financial Accounting Standards Board and is adequate under all such standards. 5.32. CREDIT CARD ACCOUNTS. Neither Chart nor any of its Subsidiaries originate, maintain or administer credit card accounts. 5.33. MERCHANT PROCESSING. Except as set forth on Section 5.33 of Chart's Disclosure Schedule, neither Chart nor any of its Subsidiaries provide, or has provided, merchant credit card processing services to any merchants. 5.34. TRANSACTIONS WITH AFFILIATES. All "covered transactions" between Chart and an "affiliate" within the meaning of Sections 23A and 23B of the Federal Reserve Act have been in compliance with such provisions and the provisions of Federal Reserve Board Regulation W. 5.35. MATERIAL INTERESTS OF CERTAIN PERSONS. Except as set forth on Section 5.35 of Chart's Disclosure Schedules, to the knowledge of Chart, no officer or director of Chart, or any "associate" (as such term is defined in Rule 14a-1 under the Exchange Act) of any such officer or director, (i) has any interest in any material contract or property (real or personal), tangible or intangible, used in or pertaining to the business of Chart or any of the Chart Subsidiaries or (ii) is indebted to, or has the right under a line of credit to borrow from, Chart or any Chart Subsidiary in an amount exceeding $25,000. 5.36. REQUIRED VOTE; ANTITAKEOVER PROVISIONS. (a) The affirmative vote of the holders of at least two-thirds of the issued and outstanding shares of Chart Common Stock is necessary to approve this Agreement and the Transactions on behalf of Chart. Except as disclosed in Section 5.36 of Chart's Disclosure Schedule, no other vote of the shareholders of Chart is required by law, the Chart Charter, the Chart Bylaws or otherwise to approve this Agreement and the Transactions. (b) Assuming the accuracy of the representation and warranty of Bancorp contained in Section 6.35, no "control share acquisition," "business combination moratorium," "fair price" or other form of antitakeover statute or regulation, including without limitation MGL Chapter 110F, is applicable to this Agreement and the transactions contemplated hereby. (c) Chart (including the Chart Board) does not have in place, and has not ever adopted, a shareholder rights or similar plan pursuant to which, subject to the occurrence of specified triggering events, Chart shareholders would be permitted to purchase at a discount shares of Chart Common Stock or other Equity Interests or property of Chart, with the intention and/or effect of diluting the value or voting power of Chart Common Stock with respect to any stockholder, or any other arrangement designed to have a similar intention and/or effect (including any plan commonly referred to as a "poison pill"). - 41 - 5.37. FAIRNESS OPINION. Chart Board has received the oral opinion of Ryan Beck & Co. LLC., which opinion will be promptly confirmed in writing and dated as of the date of this Agreement, to the effect that as of the date hereof the Merger Consideration is fair to the holders of Chart Common Stock from a financial point of view. 5.38. DISCLOSURE. The representations and warranties contained in this Article V, when considered as a whole, together with any certificate, list or other writing, including but not limited to Chart's Disclosure Schedule, specifically required to be furnished to Bancorp pursuant to the provisions hereof, do not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements and information contained herein and therein not misleading. ARTICLE VI. REPRESENTATIONS AND WARRANTIES OF BANCORP Except as Previously Disclosed, Bancorp hereby represents and warrants to Chart: 6.1. ORGANIZATION, STANDING AND AUTHORITY. Bancorp is a corporation duly organized, validly existing and in good standing under the laws of The Commonwealth of Massachusetts. Bancorp is duly qualified to do business and is in corporate good standing in each jurisdiction where its ownership or leasing of property or assets or the conduct of its business requires it to be so qualified, except when the failure to be so licensed or in good standing would not result in a Material Adverse Effect. Bancorp has in effect all federal, state, local and foreign governmental authorizations necessary for it to own, operate or lease its properties and assets and to carry on its business as now conducted. Bancorp is a bank holding company registered with the Federal Reserve Board under the BHCA. Bancorp Articles and Bancorp Bylaws, copies of which have previously been made available to Chart, are true, complete and correct copies of such documents in effect as of the date of this Agreement. Bancorp is not in violation of any provision of the Bancorp Articles or Bancorp Bylaws. The minute books of Bancorp contain in all material respects true and accurate records of all meetings held and corporate actions taken since January 1, 2001 of Bancorp's Corporators and the Bancorp Board (including committees of the Bancorp Board) other than minutes that have not been prepared as of the date hereof. 6.2. CAPITAL STRUCTURE. Bancorp has no capital stock issued and outstanding as of the date hereof. As of the Effective Time, Bancorp will have outstanding such number of shares of Common Stock as are issued and sold in the Conversion and will not have outstanding any other classes of capital stock. All shares of Bancorp Common Stock to be issued in exchange for Chart Common Stock upon consummation of the Merger, when issued in accordance with this Agreement, will be, and the shares of Bancorp Common Stock to be issued in connection with the Conversion will be duly authorized, validly issued, fully paid and nonassessable. 6.3. SUBSIDIARIES. (a) (1) Bancorp has Previously Disclosed a list of all of its Subsidiaries together with the jurisdiction of organization of each such Subsidiary and the percentage and type of equity security owned or controlled by Bancorp, (2) Bancorp owns, directly or indirectly, all the issued and outstanding equity securities of each of its Subsidiaries, all of which are duly authorized, - 42 - validly issued, fully paid, nonassessable and free of preemptive rights, with no personal liability attaching to the ownership thereof, (3) no equity securities of any of its Subsidiaries are or may become required to be issued (other than to Bancorp) by reason of any Equity Interest or otherwise, (4) there are no contracts, commitments, understandings or arrangements by which any of its Subsidiaries is or may be bound to sell or otherwise transfer any of its equity securities (other than to Bancorp or any of its wholly-owned Subsidiaries), (5) there are no contracts, commitments, understandings, or arrangements relating to Bancorp's rights to vote or to dispose of such securities, (6) all the equity securities of Bancorp's Subsidiaries held by Bancorp or its Subsidiaries are fully paid and nonassessable and are owned by Bancorp or its Subsidiaries free and clear of any Liens, and (7) there are no outstanding contractual obligations of any Subsidiary of Bancorp to repurchase, redeem or otherwise acquire any shares of capital stock of, or other equity interests in, Bancorp or any such Subsidiary or to provide funds to, or make any investment (in the form of a loan, capital contribution or otherwise) in, any such Subsidiary of Bancorp. (b) Except for securities and other interests held in a fiduciary capacity and beneficially owned by third parties or taken in consideration of debts previously contracted, Bancorp does not own beneficially, directly or indirectly, any equity securities or similar interests of any Person or any interest in a partnership or Joint Venture of any kind other than its Subsidiaries, stock in the Federal Home Loan Bank of Boston and stock in the Savings Bank Life Insurance Company of Massachusetts. (c) Each of Bancorp's Subsidiaries has been duly organized and is validly existing in good standing under the laws of the jurisdiction of its organization and is duly qualified to do business and in good standing in the jurisdictions where its ownership or leasing of property or the conduct of its business requires it to be so qualified, except when the failure to be so licensed or in good standing would not result in a Material Adverse Effect. (d) Bancorp owns all of the capital stock of Bancorp Bank free and clear of any lien or encumbrance. (e) The deposit accounts of Bancorp Bank are insured by the Bank Insurance Fund of the FDIC and the Deposit Insurance Fund of the Depositors Insurance Fund of Massachusetts in the manner and to the maximum extent provided by applicable law, and Bancorp Bank has paid all deposit insurance premiums and assessments required by applicable laws and regulations. Bancorp Bank is not obligated to make any payments for premiums and assessments and it has filed all reports required by the FDIC. Bancorp Bank does not have any deposits insured by the SAIF. As of the date hereof, no proceedings for the revocation or termination of such deposit insurance are pending or, to the best knowledge of Bancorp, threatened. (f) The Articles of Organization and Bylaws or equivalent organizational documents of each of Bancorp's Subsidiaries, copies of which have previously been made available to Chart, are true, correct and complete copies of such documents in effect as of the date of this Agreement. Neither Bancorp nor any of its Subsidiaries is in violation of any provision of its Articles of Organization, Bylaws or equivalent organizational documents. The minute books of each of Bancorp's Subsidiaries contain in all material respects true and accurate records of all meetings held and corporate actions taken since January 1, 2001 of its stockholders and Board - 43 - (including committees of its Board) other than minutes that have not been prepared as of the date hereof. 6.4. CORPORATE POWER. Each of Bancorp and its Subsidiaries has the requisite corporate power and authority to carry on its business as it is now being conducted and to own, lease or operate all its properties and assets; and Bancorp has the requisite corporate power and authority to execute, deliver and perform its obligations under this Agreement and to consummate the transactions contemplated hereby, subject to receipt of all necessary approvals of Governmental Authorities and the approval of this Agreement and the Conversion by its Corporators. 6.5. CORPORATE AUTHORITY. Subject to the approval of this Agreement and the Conversion by Bancorp's Corporators, this Agreement and the transactions contemplated hereby have been authorized by all necessary corporate action of Bancorp and Bancorp Board on or prior to the date hereof. The execution and delivery of this Agreement and the other Transaction Documents, and the consummation of the transactions contemplated hereby and thereby have been declared advisable by, and have been duly and validly approved by the vote of, the Bancorp Board. The Conversion has been approved by the Bancorp Board. The Bancorp Board (i) has directed that this Agreement and the transactions contemplated hereby, including the Conversion and the Merger, be submitted to the Corporators of Bancorp for approval at a meeting of such Corporators and (ii) has recommended that the Corporators of Bancorp approve this Agreement and the transactions contemplated hereby (including the Conversion and the Merger). Bancorp has duly executed and delivered this Agreement and, assuming due authorization, execution and delivery by Chart, this Agreement is a valid and legally binding obligation of Bancorp, enforceable in accordance with its terms (except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and similar laws of general applicability relating to or affecting creditors' rights or by general equity principles). 6.6. REGULATORY APPROVALS; NO DEFAULTS. (a) No consents or approvals of, or waivers by, or filings or registrations with, any Governmental Authority or with any third party are required to be made or obtained by Bancorp or any of its Subsidiaries in connection with the execution, delivery or performance by Bancorp or Bancorp Bank of this Agreement and the other Transaction Documents to which it is or will be a party, as applicable, or to consummate the Transactions and the other transactions contemplated hereby and thereby, except for (A) filings of applications or notices with, and approvals or waivers by, the Federal Reserve Board, the FDIC, the Massachusetts Bank Commissioner, the Depositors Insurance Fund of Massachusetts, the Co-operative Central Bank and the MHPF, as required, (B) filings with the Massachusetts Bank Commissioner, the FDIC and the SEC and state securities authorities in connection with the Conversion and the issuance of Bancorp Common Stock in the Conversion and in the Merger, (C) the filing of Amended and Restated Articles of Organization and Articles of Merger with the Secretary of State of the Commonwealth of Massachusetts, (D) the approval of the Conversion and this Agreement by the Bancorp Corporators and (E) such corporate approvals and such consents or approvals of, or waivers by, or filings or registrations with, certain of the foregoing federal and state banking agencies in connection with the Conversion or the Merger. As of the date hereof, Bancorp is not aware of any reason why the approvals set forth above or referred to in Section 8.1(c) will not be received in a timely manner and without the imposition of a condition, restriction or requirement - 44 - of the type described in Section 8.1(c) or that the requisite approval of Bancorp's Corporators will not be obtained. (b) Subject to receipt of the approvals referred to in Section 6.6(a), and the expiration of related waiting periods, the execution, delivery and performance of this Agreement and the other Transaction Documents to which it is a party by Bancorp and the consummation of the Transactions and the other transactions contemplated hereby and thereby do not and will not (A) constitute a breach or violation of, or a default under (or, with notice or lapse of time, or both, would constitute a default under), or give rise to any Lien, any acceleration of remedies or performance or any right of termination under, any law, rule or regulation or any judgment, decree, order, governmental permit or license, or agreement, indenture, note, bond, mortgage, deed of trust, lease or instrument of Bancorp or any of its Subsidiaries or to which Bancorp or any of its Subsidiaries or any of their respective properties or assets is subject, affected or bound (whether as issuer, guarantor, obligor or otherwise), (B) constitute a breach or violation of, or a default under, the articles of organization or bylaws (or similar governing documents) of Bancorp or any of its Subsidiaries or (C) require any consent or approval under any such law, rule, regulation, judgment, decree, order, governmental permit or license, agreement, indenture, note, bond, mortgage, deed of trust, lease or instrument. 6.7. BANCORP FINANCIAL STATEMENTS. (a) Bancorp has previously furnished to Chart true, correct and complete copies of Bancorp's audited consolidated balance sheets as of December 31, 2001, 2002, and 2003, and the related consolidated statements of income, changes in retained earnings and cash flows for the years then ended, together with related notes of such financial statements (all the foregoing financial statements are referred to collectively as the "BANCORP AUDITED FINANCIAL STATEMENTS"). The Bancorp Audited Financial Statements are prepared in accordance with GAAP applied on a consistent basis throughout the periods indicated and present fairly the financial condition and results of operations of Bancorp as of their respective dates and for the periods indicated thereon. (b) Bancorp has provided to Chart true and correct copies of Bancorp's unaudited consolidated balance sheets as of June 30, 2004 and the related unaudited consolidated statements of income for the six months ended June 30, 2003 and 2004 (hereinafter the foregoing financial statements are referred to collectively as the "BANCORP INTERIM FINANCIAL STATEMENTS"). The Bancorp Interim Financial Statements present fairly the financial condition and results of operations of Bancorp for the periods indicated thereon and are prepared in accordance with GAAP (except for the omission of notes to the Bancorp Interim Financial Statements and year-end adjustments to interim results, which adjustments will not be material) applied on a consistent basis with all prior periods and throughout the periods indicated. (c) Bancorp has provided to Chart true and complete copies of all quarterly Consolidated Statements for Bank Holding Companies ("CONSOLIDATED STATEMENTS") as filed with the Federal Reserve Board since December 31, 2003 through and including June 30, 2004. Such Consolidated Statements were prepared in accordance with the Federal Reserve Board's instructions and fairly present the information purported to be shown therein. - 45 - (d) The Audited Financial Statements and the Interim Financial Statements are herein referred to together as the "BANCORP FINANCIAL STATEMENTS." (e) Each of the balance sheets included in any Bancorp Financial Statement filed with the Federal Reserve Board with respect to any period subsequent to the year ended December 31, 2003 (including any related notes and schedules), does or will fairly present the consolidated financial position of Bancorp as of its date, and the other financial statements included therein (including any related notes and schedules) do or will fairly present the consolidated results of operations or other information included therein of Bancorp for the periods or as of the dates therein set forth, subject to the notes thereto, in each case in accordance with generally accepted accounting principles and auditing standards, and do or will reflect all of its assets, liabilities and accruals and all of its items of income and expense in accordance with such principles consistently applied during the periods involved. 6.8. BANCORP REPORTS. Since January 1, 2001, Bancorp and its Subsidiaries have timely filed, and subsequent to the date hereof will timely file, all reports, registrations and statements, together with any amendments required to be made with respect thereto, that were and are required to be filed with (i) the FDIC and the Federal Reserve Board and (ii) any applicable state securities or banking authorities (except, in the case of state securities authorities, no such representation is made as to filings which are not material) (all such reports, registrations and statements, together with any amendments thereto and the Bancorp Financial Statements, are collectively referred to herein as the "BANCORP REPORTS") and have paid all fees and assessments due and payable in connection with any of the foregoing. As of the date filed or to be filed and as amended prior to the date hereof, Bancorp Reports complied and, with respect to filings made after the date of this Agreement, will at the date of filing comply, in all material respects with all of the statutes, rules and regulations enforced or promulgated by the regulatory authority with which they were filed. Except for normal periodic examinations conducted by a Bank Regulator in the regular course of the business of Bancorp and its Subsidiaries, since January 1, 2001, no Bank Regulator has initiated any proceeding or, to the best knowledge of Bancorp, investigation into the business or operations of Bancorp or any of its Subsidiaries. Except as set forth on Section 5.7 of Bancorp's Disclosure Schedule, Bancorp and its Subsidiaries have resolved all material violations, criticisms or exceptions by any Bank Regulator with respect to any such normal periodic examination. 6.9. ABSENCE OF UNDISCLOSED LIABILITIES. Except for those liabilities that are appropriately reflected or reserved against in the balance sheets of the Bancorp Reports and for liabilities incurred in the ordinary course of business consistent with past practice or in connection with this Agreement or the transactions contemplated hereby, since January 1, 2004, neither Bancorp nor any of its Subsidiaries has incurred any obligation or liability (contingent or otherwise) that, either alone or when combined with all similar liabilities, has had, or could reasonably be expected to have, a Material Adverse Effect on Bancorp. 6.10. NO MATERIAL ADVERSE EFFECT. Since December 31, 2003, except as set forth in Section 6.10 of Bancorp's Disclosure Schedule or reflected in the Bancorp Reports, there has not been either individually or in the aggregate, any Material Adverse Effect and, to the best knowledge of Bancorp, no fact or condition exists that is reasonably likely to cause such a - 46 - Material Adverse Effect in the future (assuming, for purposes of this Section 6.10 that "MATERIAL ADVERSE EFFECT" is subject to the same exclusions contained in Section 8.2(c) (1)-(5)), 6.11. LITIGATION. Except as set forth on Section 6.11 of Bancorp's Disclosure Schedule, there is no claim, suit, action, proceeding or investigation of any nature pending or, to the best knowledge of Bancorp, threatened, against Bancorp or any Subsidiary of Bancorp or challenging the validity or propriety of the transactions contemplated by this Agreement, nor is there any judgment, decree, injunction, rule, award or order of any legal or administrative body or arbitrator outstanding against Bancorp or any Subsidiary of Bancorp having, or which insofar as reasonably can be foreseen, in the future could have, any such effect or restricting, or that could restrict, its ability to conduct business in any material respect in any area. Bancorp is not aware of any facts that could reasonably give rise to any such claim, suit, action, investigation or other proceeding. 6.12. REGULATORY MATTERS. (a) Neither Bancorp nor any of its Subsidiaries nor any of any of their respective properties is a party to or is subject to any order, decree, agreement, memorandum of understanding or similar arrangement with, or a commitment letter or similar submission to, order to cease and desist with, or extraordinary supervisory letter from, any federal or state governmental agency or authority charged with the supervision or regulation of financial institutions or issuers of securities or engaged in the insurance of deposits or the supervision or regulation of it (collectively, the "BANCORP REGULATORY AUTHORITIES"), or is subject to any order or directive specifically naming or referring to Bancorp or any of its Subsidiaries by, has been required to adopt any board resolution by, any Bancorp Regulatory Authority that is currently in effect, and neither Bancorp nor any of its Subsidiaries has received written notification from any such Bancorp Regulatory Authority that any such Person may be requested to enter into, or otherwise be subject to, any such commitment letter, written agreement, memorandum of understanding, cease and desist order or any other similar order or directive. Except as set forth in Section 6.12(a) of Bancorp's Disclosure Schedule, neither Bancorp nor any of its Subsidiaries is a party to any agreement or arrangement entered into in connection with the consummation of a federally assisted acquisition of a depository institution pursuant to which Bancorp or any of its Subsidiaries is entitled to receive financial assistance or indemnification from any Governmental Authority. Bancorp and its Subsidiaries have paid all assessments made or imposed by any Bancorp Regulatory Authority. (b) Neither Bancorp nor any its Subsidiaries has been advised by, or has any knowledge of facts which would reasonably be expected to give rise to an advisory notice by, any Bancorp Regulatory Authority that such Bancorp Regulatory Authority is contemplating issuing or requesting (or is considering the appropriateness of issuing or requesting) any such order, decree, agreement, memorandum of understanding, commitment letter, supervisory letter or similar submission. 6.13. COMPLIANCE WITH LAWS. Each of Bancorp and its Subsidiaries: (a) is in material compliance with all applicable federal, state, local and foreign statutes, laws, regulations, ordinances, rules, judgments, orders or decrees applicable thereto or to the - 47 - employees conducting such businesses, including, without limitation, the Equal Credit Opportunity Act, the Fair Housing Act, the Community Reinvestment Act, the Home Mortgage Disclosure Act and all other applicable fair lending laws and other laws relating to discriminatory business practices; (b) has all permits, licenses, franchises, authorizations, orders and approvals of, and has made all filings, applications and registrations with, all Governmental Authorities that are required in order to permit them to own or lease their properties and to conduct their businesses as presently conducted; all such permits, licenses, certificates of authority, orders and approvals are in full force and effect and, to Bancorp's knowledge, no suspension or cancellation of any of them is threatened; and (c) has received, since December 31, 2000, no notification or communication from any Governmental Authority (A) asserting that Bancorp or any of its Subsidiaries is not in material compliance with any of the statutes, regulations or ordinances which such Governmental Authority enforces or (B) threatening to revoke any license, franchise, permit or governmental authorization (nor, to Bancorp's knowledge, do any grounds for any of the foregoing exist). 6.14. MATERIAL CONTRACTS; DEFAULTS. Except as set forth on Schedule 6.14 of Bancorp's Disclosure Schedules, neither Bancorp nor any of its Subsidiaries is in material default under any contract, agreement, commitment, arrangement, lease, insurance policy or other instrument to which it is a party, by which its respective assets, business, or operations may be bound or affected, or under which it or its respective assets, business, or operations receives benefits, and there has not occurred any event that, with the lapse of time or the giving of notice or both, would constitute such a default. No power of attorney or similar authorization given directly or indirectly by Bancorp or any of its Subsidiaries is currently outstanding. 6.15. NO BROKERS. Excluding a Previously Disclosed arrangement with and fee paid or payable to McConnell, Budd & Romano, Inc., neither Bancorp nor any of its officers, directors, employees, affiliates or agents has employed any broker, finder or financial advisor or incurred any liability for any fees or commissions in connection with any of the transactions contemplated by this Agreement except for legal, accounting and other professional fees payable in connection with the Merger and the other transactions contemplated hereby. Bancorp will be responsible for the payment of all such fees. The fee payable to McConnell, Budd & Romano, Inc. in connection with the transactions contemplated by this Agreement is as described in an engagement letter between Bancorp and McConnell, Budd & Romano, Inc., a true and complete copy of which has heretofore been furnished to Chart. 6.16. EMPLOYEE BENEFIT PLANS. (a) All benefit and compensation plans, contracts, policies or arrangements covering current or former employees of Bancorp and its Subsidiaries and current or former directors of Bancorp and its Subsidiaries including, but not limited to, "employee benefit plans" within the meaning of Section 3(3) of ERISA, and deferred compensation, stock option, stock purchase, stock appreciation rights, stock based, incentive and bonus plans (the "BANCORP BENEFIT PLANS"), are Previously Disclosed in the Disclosure Schedule. True and complete copies of all Bancorp Benefit Plan documents and summary plan descriptions, the most recent determination letter - 48 - received from the Internal Revenue Service, the most recent annual report (Form 5500, with all applicable attachments), and all related trust instruments, insurance contracts, and other funding arrangements, forming a part of any Bancorp Benefit Plans and all amendments thereto have been provided or made available to Chart. (b) All Bancorp Benefit Plans are in substantial compliance with ERISA, the Code, and other applicable laws in all material respects. Each Bancorp Benefit Plan which is a Pension Plan and which is intended to be qualified under Section 401(a) of the Code, has received a favorable determination letter from the Internal Revenue Service, and Bancorp is not aware of any circumstances likely to result in revocation of any such favorable determination letter or the loss of the qualification of such Pension Plan under Section 401(a) of the Code. There is no material pending or, to Bancorp's knowledge, threatened litigation relating to the Bancorp Benefit Plans. Neither Bancorp nor any of its Subsidiaries has engaged in a transaction with respect to any Bancorp Benefit Plan or Pension Plan that could subject Bancorp or any of its Subsidiaries to a tax or penalty imposed by either Section 4975 of the Code or Section 502(i) of ERISA in an amount that would be material. (c) All contributions required to be made under the terms of any Bancorp Benefit Plan have been timely made or have been reflected on the financial statements of Bancorp included in the Bancorp Reports. (d) Neither Bancorp, nor any of its Subsidiaries, or any ERISA Affiliate, has incurred any liability under Title IV of ERISA which will not have been paid in full prior to the Closing. Neither Bancorp nor any of its Subsidiaries or any ERISA Affiliate currently maintains any Pension Plan subject to Code Section 412 or ERISA Section 302, and Bancorp has received approval from the Pension Benefit Guaranty Corporation with regard to the termination of its defined benefit Pension Plan. Neither Bancorp, nor any of its Subsidiaries, or any ERISA Affiliate has ever maintained a Multiemployer Plan. (e) There are no pending or, to the knowledge of Bancorp, threatened claims by or on behalf of any Bancorp Benefit Plans or by or on behalf of any individual participants or beneficiaries of any Bancorp Benefit Plan, alleging any breach of fiduciary duty on the part of Bancorp or any of its officers, directors or employees under ERISA or any other applicable regulations, or claiming benefit payments for which Bancorp may be liable (other than those made in the ordinary operation of such plans), nor is there, to the knowledge of Bancorp, any basis for such claim. The Bancorp Benefit Plans are not the subject of any pending (or to the knowledge of Bancorp, any threatened) investigation or audit by the Internal Revenue Service, the Department of Labor or the Pension Benefit Guaranty Corporation. (f) With respect to any Bancorp Benefit Plan that is a Welfare Plan and except as Previously Disclosed, (i) each Welfare Plan for which contributions are claimed by Bancorp as deductions under any provision of the Code is in material compliance with all applicable requirements pertaining to such deduction, (ii) any Bancorp Benefit Plan that is a group health plan (within the meaning of Section 4980B(g)(2) of the Code) complies, and in each and every case has complied, with all of the applicable material requirements of Section 4980B of the Code, ERISA, Title XXII of the Public Health Service Act and the Social Security Act, and (iii) all Welfare Plans may be amended or terminated at any time on or after the Closing Date - 49 - without incurring any liability thereunder. (g) Neither Bancorp nor any of its Subsidiaries has any obligations for retiree health and life benefits under any Bancorp Benefit Plan, other than coverage as may be required under Section 4980B of the Code or Part 6 of Title I of ERISA, or under the continuation of coverage provisions of the laws of any state or locality. (h) As of the date of this Agreement, neither Bancorp nor any of its Subsidiaries is a party to any agreement, contract, arrangement or plan that has resulted or would result, separately or in the aggregate, in the payment of (i) any "excess parachute payment" within the meaning of Code Section 280G (or any corresponding provision of state, local or foreign Tax law) or (ii) any amount that will not be fully deductible as a result of Code Section 162(m) (or any corresponding provision of state, local or foreign Tax law). None of the execution of this Agreement, Corporator approval of this Agreement or consummation of the transactions contemplated by this Agreement will (A) entitle any employees of Bancorp or any of its Subsidiaries to severance pay or any increase in severance pay upon any termination of employment after the date hereof, (B) accelerate the time of payment or vesting or trigger any payment or funding (through a grantor trust or otherwise) of compensation or benefits under, increase the amount payable or trigger any other material obligation pursuant to, any of the Bancorp Benefit Plans, (C) result in any breach or violation of, or a default under, any of the Bancorp Benefit Plans, (D) result in any payment that would be a "parachute payment" to a "disqualified individual" as those terms are defined in Section 280G of the Code, without regard to whether such payment is reasonable compensation for personal services performed or to be performed in the future or (E) result in any payment that would be nondeductible pursuant to Section 162(m) of the Code. 6.17. LABOR MATTERS. Neither Bancorp nor any of its Subsidiaries is a party to or is bound by any collective bargaining agreement, contract or other agreement or understanding with a labor union or labor organization, nor is Bancorp or any of its Subsidiaries the subject of a proceeding asserting that it has committed an unfair labor practice (within the meaning of the National Labor Relations Act) or seeking to compel Bancorp or any of its Subsidiaries to bargain with any labor organization as to wages or conditions of employment, nor is there any strike, work stoppage or other labor dispute, arbitration, lawsuit or administrative proceeding involving it or any of its Subsidiaries pending or, to Bancorp's knowledge, threatened, nor is Bancorp or any of its Subsidiaries aware of any activity involving its employees seeking to certify a collective bargaining unit or engaging in other organizational activity. No employees of Bancorp or any of its Subsidiaries are represented by any labor union. 6.18. ENVIRONMENTAL MATTERS. (a) Bancorp and its Subsidiaries are in material compliance with applicable Environmental Laws; (b) to Bancorp's knowledge, no real property (including buildings or other structures) currently or formerly owned or operated by Bancorp or any of its Subsidiaries, or any property in which Bancorp or any of its Subsidiaries has held a security interest, Lien or a fiduciary or management role ("BANCORP LOAN PROPERTY"), has been contaminated with, or has had any - 50 - release of, any Hazardous Substance except in compliance with Environmental Laws; (c) neither Bancorp nor any of its Subsidiaries has participated in the management regarding Hazardous Substances of, any Bancorp Loan Property which has been contaminated with, or has had any release of, any Hazardous Substance except in compliance with Environmental Laws; (d) neither Bancorp nor any of its Subsidiaries has any material liability for any Hazardous Substance disposal or contamination on any third party property; (e) neither Bancorp nor any of its Subsidiaries has received any notice, demand letter, claim or request for information alleging any violation of, or liability under, any Environmental Law; (f) neither Bancorp nor any of its Subsidiaries is subject to any order, decree, injunction or other agreement with any Governmental Authority or any third party relating to any Environmental Law; (g) to Bancorp's knowledge, there are no circumstances or conditions (including the presence of asbestos, underground storage tanks, lead products, polychlorinated biphenyls, prior manufacturing operations, dry-cleaning, or automotive services) involving Bancorp or any of its Subsidiaries, any currently or formerly owned or operated property, or any Bancorp Loan Property, that could reasonably be expected to result in any claims, liability or investigations against Bancorp or any of its Subsidiaries, result in any restrictions on the ownership, use, or transfer of any property pursuant to any Environmental Law, or adversely affect the value of any Bancorp Loan Property; and (h) Bancorp has delivered or, at Chart's request, made available to Chart copies of all environmental reports, studies, sampling data, correspondence, filings and other environmental information in its possession or reasonably available to it relating to Bancorp, its Subsidiaries and any currently or formerly owned or operated property or any Bancorp Loan Property. 6.19. TAX MATTERS. (a) For the taxable years ended December 31, 2003, 2002, 2001, 2000, 1999, 1998 and 1997, each of Bancorp and its Subsidiaries has filed all Tax Returns that it was required to file under applicable laws and regulations. All such Tax Returns were correct and complete in all material respects and have been prepared in substantial compliance with all applicable laws and regulations. All Taxes due and owing by Bancorp or any of its Subsidiaries (whether or not shown on any Tax Return) have been paid. Neither Bancorp nor any of its Subsidiaries is currently the beneficiary of any extension of time within which to file any Tax Return. No claim has ever been made by an authority in a jurisdiction where Bancorp or any of its Subsidiaries does not file Tax Returns that it is or may be subject to taxation by that jurisdiction. There are no Liens for Taxes (other than Taxes not yet due and payable) upon any of the assets of Bancorp or any of its Subsidiaries. - 51 - (b) Bancorp and each of its Subsidiaries has withheld and paid all Taxes required to have been withheld and paid in connection with any amounts paid or owing to any employee, independent contractor, creditor, stockholder, or other third party. (c) No foreign, federal, state, or local tax audits or administrative or judicial Tax proceedings are pending or being conducted with respect to Bancorp or any of its Subsidiaries. Neither Bancorp nor any of its Subsidiaries has received from any foreign, federal, state, or local taxing authority (including jurisdictions where Bancorp or any of its Subsidiaries has not filed Tax Returns) any (i) notice indicating an intent to open an audit or other review, (ii) request for information related to Tax matters, or (iii) notice of deficiency or proposed adjustment for any amount of Tax proposed, asserted, or assessed by any taxing authority against Bancorp or any of its Subsidiaries. (d) Bancorp has provided Chart with true and complete copies of the United States federal, state, local, and foreign income Tax Returns filed with respect to Bancorp and its Subsidiaries for taxable periods ended on or after December 31, 2000. The Disclosure Schedule indicates those Tax Returns that have been audited during the last three years, and those Tax Returns that currently are the subject of an audit. Bancorp has delivered to Chart correct and complete copies of all examination reports, and statements of deficiencies assessed against or agreed to by Bancorp or any of its Subsidiaries filed for the years ended on or after December 31, 2000. (e) Neither Bancorp nor any of its Subsidiaries has waived any statute of limitations in respect of Taxes or agreed to any extension of time with respect to a Tax assessment or deficiency. (f) Neither Bancorp nor any of its Subsidiaries has filed a consent under Code Section 341(f) concerning collapsible corporations. Neither Bancorp nor any of its Subsidiaries has been a United States real property holding corporation within the meaning of Code Section 897(c)(2) during the applicable period specified in Code Section 897(c)(1)(A)(ii). Bancorp and each of its Subsidiaries has disclosed on its federal income Tax Returns all positions taken therein that could give rise to a substantial understatement of federal income Tax within the meaning of Code Section 6662. Neither Bancorp nor any of its Subsidiaries is a party to or bound by any Tax allocation or sharing agreement. Neither Bancorp nor any of its Subsidiaries (A) has been a member of an Affiliated Group filing a consolidated federal income Tax Return (other than a group the common parent of which was Bancorp) and (B) has any liability for the Taxes of any Person (other than Bancorp and its Subsidiaries) under Reg. Section 1.1502-6 (or any similar provision of state, local, or foreign law), as a transferee or successor, by contract, or otherwise. (g) The unpaid Taxes of Bancorp and its Subsidiaries do not exceed the reserve for Tax liability (which reserve is distinct and different from any reserve for deferred Taxes established to reflect timing differences between book and Tax income) established on the books and records of Bancorp and its Subsidiaries. (h) Neither Bancorp nor any of its Subsidiaries will be required to include any item of income in, or exclude any item of deduction from, taxable income for any taxable period (or portion thereof) ending after the Closing Date as a result of any: (A) change in method of - 52 - accounting for a taxable period ending on or prior to the Closing Date; (B) "closing agreement" as described in Code Section 7121 (or any corresponding or similar provision of state, local or foreign income Tax law) executed on or prior to the Closing Date; (C) intercompany transactions or any excess loss account described in Treasury Regulations under Code Section 1502 (or any corresponding or similar provision of state, local or foreign income Tax law); (D) installment sale or open transaction disposition made on or prior to the Closing Date; or (E) prepaid amount received on or prior to the Closing Date. (i) Neither Bancorp nor any of its Subsidiaries has distributed stock of another person, nor had its stock distributed by another person, in a transaction that was purported or intended to be governed in whole or in part by Code section 355 or Code section 361. 6.20. RISK MANAGEMENT INSTRUMENTS. Neither Bancorp nor any of its Subsidiaries is a party or has agreed to enter into any Derivatives Contract or owns securities that (i) are referred to generically as "structured notes," "high risk mortgage derivatives," "capped floating rate notes" or "capped floating rate mortgage derivatives" or (ii) are likely to have changes in value as a result of interest or exchange rate changes that significantly exceed normal changes in value attributable to interest or exchange rate changes, except for those Derivatives Contracts and other instruments legally purchased or entered into in the ordinary course of business, consistent with safe and sound banking practices and regulatory guidance. All of such Derivatives Contracts or other instruments, are legal, valid and binding obligations of Bancorp or any of its Subsidiaries enforceable in accordance with their terms (except as enforcement may be limited by general principles of equity whether applied in a court of law or a court of equity and by bankruptcy, insolvency and similar laws affecting creditors' rights and remedies generally), and are in full force and effect. Bancorp and its Subsidiaries have duly performed in all material respects all of their material obligations thereunder to the extent that such obligations to perform have accrued; and, to Bancorp's knowledge, there are no breaches, violations or defaults or allegations or assertions of such by any party thereunder that would have or would reasonably be expected to have a Material Adverse Effect on Bancorp. 6.21. INVESTMENT SECURITIES. Except for pledges to secure public and trust deposits, Federal Reserve borrowings, Federal Home Loan Bank advances, repurchase agreements and reverse repurchase agreements entered into in arms'-length transactions pursuant to normal commercial terms and conditions and other pledges required by law, none of the investments reflected in the balance sheet of Bancorp contained in its most recent Financial Statements made available to Chart, and none of the material investments made by Bancorp or any of its Subsidiaries since January 1, 2004 is subject to any restriction (contractual, statutory or otherwise) that would materially impair the ability of the entity holding such investment freely to dispose of such investment at any time. The information (including electronic information and information contained on tapes and computer disks) with respect to all investment securities (including mortgaged-backed securities) of Bancorp and its Subsidiaries furnished to Chart by Bancorp is, as of the respective dates indicated therein, true and correct in all material respects. 6.22. LOANS; NONPERFORMING AND CLASSIFIED ASSETS. (a) Each Loan on the books and records of Bancorp and its Subsidiaries, was made and has been serviced in all material respects in accordance with customary lending standards in the - 53 - ordinary course of business, is evidenced in all material respects by appropriate and sufficient documentation and, to the knowledge of Bancorp, constitutes the legal, valid and binding obligation of the obligor named therein, subject to bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and similar laws of general applicability relating to or affecting creditor's rights or by general equity principles. The information (including electronic information and information contained on tapes and computer disks) with respect to all Loans of Bancorp and its Subsidiaries furnished to Chart by Bancorp is, as of the respective dates indicated therein, true and correct in all material respects. To the best knowledge of Bancorp, all loans originated, directly or through third party mortgage brokers, have been originated in compliance with all federal, state and local laws, including without limitation, the Real Estate Settlement Procedures Act of 1974, as amended. (b) Bancorp has Previously Disclosed as to Bancorp and each Bancorp Subsidiary as of the latest practicable date: (i) any written or, to Bancorp's knowledge, oral Loan under the terms of which the obligor is 60 or more days delinquent in payment of principal or interest, or to Bancorp's knowledge, in default of any other material provision thereof; (ii) each Loan that has been classified as "substandard," "doubtful," "loss" or "special mention" (or words of similar import) by Bancorp, a Bancorp Subsidiary or an applicable regulatory authority (it being understood that no representation is being made that FDIC or Staff of the Massachusetts Bank Commissioner would agree with the loan classifications established by Bancorp); (iii) a listing of the OREO acquired by foreclosure or by deed-in-lieu thereof, including the book value thereof; and (iv) each Loan with any trustee, director, executive officer or Corporator of Bancorp, or to the best knowledge of Bancorp, any Person controlling, controlled by or under common control with any of the foregoing. (c) No agreement pursuant to which any loans or other assets have been or shall be sold by Bancorp or its Subsidiaries entitled the buyer of such loans or other assets, unless there is material breach of a representation or covenant by Bancorp or its Subsidiaries, to cause Bancorp or its Subsidiaries to repurchase such loan or other asset or the buyer to pursue any other form of recourse against Bancorp or its Subsidiaries. 6.23. BANK OWNED LIFE INSURANCE. Bancorp has Previously Disclosed a true, correct and complete description of all BOLI owned by Bancorp or its Subsidiaries. The value of such BOLI as of the date hereof is fairly and accurately reflected on the most recent Bancorp Financial Statements in accordance with GAAP. Except as set forth on Section 6.23 of Bancorp's Disclosure Schedule, all life insurance policies on the lives of any of the current and former officers and directors of Bancorp or any of its Subsidiaries that are maintained by Bancorp or any such Subsidiary that are otherwise included as assets on the books of Bancorp or such Subsidiary are, or will at the Effective Time be, owned by Bancorp or such Subsidiary, as the case may be, free and clear of any claims thereon by the officers or members of their families, except with respect to the death benefits thereunder, as to which Bancorp or such Subsidiary agree that there will not be an amendment prior to the Effective Time without the consent of Chart's Authorized Representative. 6.24. PROPERTIES. The real and material personal property owned by Bancorp or a Subsidiary of Bancorp or presently used by any of them in its respective business is in an adequate condition (ordinary wear and tear excepted) and is sufficient to carry on its business in - 54 - the ordinary course of business consistent with its past practices. Bancorp has good and marketable title free and clear of all Liens to all of the real and material personal properties and assets reflected on the consolidated statement of financial condition of Bancorp as of December 31, 2003 included in the Bancorp Reports or acquired after such date, other than properties sold by Bancorp in the ordinary course of business, except (i) Liens for current taxes and assessments not yet due or payable, (ii) pledges to secure deposits and other Liens incurred in the ordinary course of its banking business, (iii) such imperfections of title, easements and encumbrances, if any, as are not, individually or in the aggregate, material in character, amount or extent and (iv) as reflected on the consolidated statement of financial condition of Bancorp as of December 31, 2003 included in the Bancorp Reports. All real and personal property that is material to Bancorp's business on a consolidated basis and leased or licensed by Bancorp or a Subsidiary of Bancorp is held pursuant to leases or licenses that are valid and enforceable in accordance with their respective terms and such leases will not terminate or lapse prior to the Effective Time and there exists no material default under any such leases or licenses by Bancorp or any of its Subsidiaries nor, to the best knowledge of Bancorp and except as set forth on Section 6.24 of Bancorp's Disclosure Schedule, any event which, with notice or lapse of time or both, would constitute a material default thereunder by Bancorp or any other Bancorp Subsidiaries, except for such defaults which, individually, or in the aggregate, would not result in the forfeiture of the use or occupancy of the property covered by such lease or in a material liability to Bancorp. The consent of the landlord under the real estate leases listed on Section 6.24 of Bancorp's Disclosure Schedule may be required in order to consummate the transactions contemplated by this Agreement. 6.25. INTELLECTUAL PROPERTY. Bancorp and each Subsidiary of Bancorp owns or possesses valid and binding licenses and other rights to use without payment of any material amount all material patents, copyrights, trade secrets, trade names, service marks and trademarks used in its businesses, all of which have been Previously Disclosed by Bancorp, and none of Bancorp or any of its Subsidiaries has received any notice of conflict with respect thereto that asserts the right of others. Bancorp and each Subsidiary has performed in all material respects all the obligations required to be performed by it and is not in default under any contract, agreement, arrangement or commitment relating to any of the foregoing. 6.26. FIDUCIARY ACCOUNTS. Neither Bancorp nor any of its Subsidiaries engage in any trust business or administers or maintains accounts for which it acts as a fiduciary (other than individual retirement accounts and Keogh accounts), including but not limited to accounts for which it serves as a trustee, agent, custodian, personal representative, guardian, conservator or investment advisor. 6.27. CAPITALIZATION. Bancorp Bank is "well capitalized," as such term is defined in the rules and regulations promulgated by the FDIC. 6.28. COMMUNITY REINVESTMENT ACT, ANTI-MONEY LAUNDERING AND CUSTOMER INFORMATION SECURITY. Neither Bancorp nor Bancorp Bank is aware of, has been advised of, or has reason to believe that any facts or circumstances exist, which would cause Bancorp Bank: (i) to be deemed not to be in satisfactory compliance in any material respect with the Community Reinvestment Act, and the regulations promulgated thereunder, or to be assigned a rating for Community Reinvestment Act purposes by federal or state bank regulators of lower than - 55 - "satisfactory;" or (ii) to be deemed to be operating in violation in any material respect of the federal Bank Secrecy Act, as amended, and its implementing regulations (31 C.F.R. Part 103), the USA Patriot Act, and the regulations promulgated thereunder, any order issued with respect to anti-money laundering by the U.S. Department of the Treasury's Office of Foreign Assets Control, or any other applicable anti-money laundering statute, rule or regulation; or (iii) to be deemed not to be in satisfactory compliance in any material respect with the applicable privacy of customer information requirements contained in any federal and state privacy laws and regulations, including without limitation, in Title V of the Gramm-Leach-Bliley Act of 1999 and regulations promulgated thereunder, as well as the provisions of the information security program adopted by Bancorp Bank pursuant to 12 C.F.R. Part 364. Furthermore, the board of directors of Bancorp Bank has adopted and Bancorp Bank has implemented an anti-money laundering program that contains adequate and appropriate customer identification verification procedures that has not been deemed ineffective in any material respects by any Bank Regulators and that meets the requirements in all material respects of Section 352 of the USA Patriot Act and the regulations thereunder. 6.29. BOOKS AND RECORDS. The books and records of Bancorp and its Subsidiaries are being maintained in material compliance with applicable legal and accounting requirements, and such books and records accurately reflect in all material respects all dealings and transactions in respect of the business, assets, liabilities and affairs of Bancorp and its Subsidiaries. 6.30. INSURANCE. Bancorp has Previously Disclosed all of the material Insurance Policies currently maintained by Bancorp or any of its Subsidiaries. Bancorp and its Subsidiaries are insured with reputable insurers against such risks and in such amounts as the management of Bancorp reasonably has determined to be prudent in accordance with industry practices. All the Insurance Policies are in full force and effect; Bancorp and its Subsidiaries are not in material default thereunder and have not received any notice of cancellation with respect thereto; and all claims thereunder have been filed in due and timely fashion, and Bancorp and its Subsidiaries, as applicable, have timely provided such insurers with due notice of all matters that may reasonably become a claim or otherwise constitute a basis for seeking recovery under the Insurance Policies. 6.31. ALLOWANCE FOR LOAN LOSSES. Bancorp's allowance for loan losses is in compliance with Bancorp's existing methodology for determining the adequacy of its allowance for loan losses and, to the knowledge of Bancorp, the standards established by applicable Governmental Authorities and the Financial Accounting Standards Board and is adequate under all such standards. 6.32. CREDIT CARD ACCOUNTS. Neither Bancorp nor any of its Subsidiaries originate, maintain or administer credit card accounts. 6.33. MERCHANT PROCESSING. Neither Bancorp nor any of its Subsidiaries provide, or has provided, merchant credit card processing services to any merchants. 6.34. TRANSACTIONS WITH AFFILIATES. All "covered transactions" between Bancorp Bank and an "affiliate" within the meaning of Sections 23A and 23B of the Federal Reserve Act have been in compliance with such provisions and the provisions of Federal Reserve Board Regulation W. - 56 - 6.35. OWNERSHIP OF CHART COMMON STOCK. None of Bancorp or any of Bancorp's Subsidiaries, or to Bancorp's knowledge, any of its other affiliates or associates (as such terms are defined under the Exchange Act), owns beneficially or of record, directly or indirectly, or is a party to any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of, shares of Chart Common Stock (other than shares held in a fiduciary capacity that are beneficially owned by third parties or as a result of debts previously contracted) which in the aggregate represent 5% or more of the outstanding Chart Common Stock. 6.36. DISCLOSURE. The representations and warranties contained in this Article VI, when considered as a whole, together with any certificate, list or other writing, including but not limited to Bancorp's Disclosure Schedule, specifically required to be furnished to Chart pursuant to the provisions hereof, do not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements and information contained herein and therein not misleading. ARTICLE VII. COVENANTS 7.1. REASONABLE BEST EFFORTS. Subject to the terms and conditions of this Agreement, each of Chart and Bancorp agrees to use its reasonable best efforts in good faith to take, or cause to be taken, all actions, and to do, or cause to be done, all things necessary, proper or desirable, or advisable under applicable laws, so as to permit consummation of the Transactions as promptly as practicable and otherwise to enable consummation of the Transactions, including the satisfaction of the conditions set forth in Article VIII hereof, and shall cooperate fully with the other parties hereto to that end. Without limiting the generality of the foregoing, (i) Bancorp will use its reasonable best efforts to cause the following steps to be taken on or prior to December 31, 2004: the filing of its Plan of Conversion with the Massachusetts Bank Commissioner (and related filings with the FDIC, if any) and the Federal Reserve; the filing of its Registration Statement on Form S-1 with the SEC (and related filings with the Massachusetts Bank Commissioner and the FDIC, if any); and the filing of its regulatory applications with respect to the Merger with the Massachusetts Bank Commissioner and the FDIC; and (ii) Chart will use its reasonable best efforts to provide Bancorp, at least two weeks prior to the date on which Bancorp intends to make such filings, with all financial and other information with respect to Chart (in substantially the form required by the applicable governmental agency) necessary to enable such filings to be made, provided that Bancorp has notified Chart of such expected filing dates at least five weeks in advance of such anticipated filing dates. 7.2. BANCORP CONVERSION FROM MUTUAL TO STOCK FORM. Commencing promptly after the date of this Agreement, Bancorp and Bancorp Bank will take all reasonable steps necessary to expeditiously effect the Conversion. In addition, without limiting the generality of the foregoing, Bancorp shall cause the following to be done: (a) As promptly as practicable after receipt of all approvals or non-objections necessary from the applicable bank regulators, Bancorp shall duly call, give notice of, convene and hold a special meeting of its Corporators for the purpose of approving the Conversion and for such other purposes as may be, in the reasonable judgment of Bancorp, necessary or desirable. The Board of Trustees of Bancorp will recommend to the Corporators the approval of the - 57 - Conversion. (b) Bancorp will use its reasonable best efforts to prepare and file as promptly as practicable all required regulatory applications required in connection with the Conversion and the Merger, including, without limitation, filing applications with the Massachusetts Bank Commissioner, the FDIC and the Federal Reserve Board. 7.3. REGISTRATION STATEMENTS. (a) Bancorp agrees to use its reasonable best efforts to prepare and file, as promptly as practicable, a Registration Statement on Form S-1 or other applicable form to be filed by Bancorp with the SEC and the Massachusetts Bank Commissioner in connection with the issuance of Bancorp Common Stock in the Conversion (including the prospectus constituting a part thereof (the "CONVERSION PROSPECTUS") and all related documents). Bancorp also agrees to prepare and file a registration statement on Form S-4 or other applicable form to be filed as soon as practicable (but in no event later than ten days following the date on which the SEC declares the Registration Statement on Form S-1 effective) by Bancorp with the SEC in connection with the issuance of Bancorp Common Stock in the Merger (including the proxy statement and prospectus and other proxy solicitation materials of Chart constituting a part thereof (the "PROXY STATEMENT") and all related documents). Chart shall use its reasonable best efforts to prepare and furnish, as soon as practicable, such information relating to it and its directors, officers and stockholders as may be reasonably required in connection with the above referenced documents based on its and its legal, financial and accounting advisors' knowledge of and access to the information required for said documents, and Chart, and its legal, financial and accounting advisors, shall have the right to review in advance each such Registration Statement prior to its filing. Chart agrees to cooperate with Bancorp and Bancorp's counsel and accountants in requesting and obtaining appropriate opinions, consents and letters from its financial advisor and independent auditor in connection with the Registration Statements and the Proxy Statement. Each of Chart and Bancorp agrees to use its reasonable best efforts to cause each Registration Statement to be declared effective under the Securities Act as promptly as reasonably practicable after the filing thereof. Bancorp also agrees to use its reasonable best efforts to obtain approval from the Massachusetts Bank Commissioner and all necessary state securities law or "Blue Sky" permits and approvals required to carry out the transactions contemplated by this Agreement. Promptly after the Registration Statement containing the Conversion Prospectus is declared effective under the Securities Act, Bancorp shall mail at its expense the Conversion Prospectus to Bancorp Bank's eligible depositors. Promptly after the Registration Statement containing the Proxy Statement is declared effective under the Securities Act, Chart shall mail at its expense the Proxy Statement to its stockholders. (b) Each of Chart and Bancorp agrees that none of the information supplied or to be supplied by it for inclusion or incorporation by reference in (i) either Registration Statement shall, at the time the Registration Statement and each amendment or supplement thereto, if any, becomes effective under the Securities Act, 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; (ii) the Conversion Prospectus and any amendment or supplement thereto shall, at the date(s) of mailing to eligible depositors and at the time of the closing of the Conversion, contain any untrue statement of a material fact or omit to state any material fact - 58 - required to be stated therein or necessary to make the statements therein not misleading at the time and in light of the circumstances under which such statement is made; and (iii) the Proxy Statement and any amendment or supplement thereto shall, at the date(s) of mailing to stockholders and at the time of Chart Meeting, 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 at the time and in light of the circumstances under which such statement is made. Each of Chart and Bancorp further agrees that if such party shall become aware prior to the Effective Date of any information furnished by such party that would cause any of the statements in either Registration Statement, the Conversion Prospectus or the Proxy Statement to be false or misleading with respect to any material fact, or to omit to state any material fact necessary to make the statements therein not false or misleading, to promptly inform the other parties thereof and to take the necessary steps to correct the Registration Statement, the Conversion Prospectus or the Proxy Statement. (c) Bancorp agrees to advise Chart, promptly after Bancorp receives notice thereof, of the time when a Registration Statement has become effective or any supplement or amendment has been filed, of the issuance of any stop order or the suspension of the qualification of Bancorp Common Stock for offering or sale in any jurisdiction, of the initiation or, to the extent Bancorp is aware thereof, threat of any proceeding for any such purpose, or of any request by the SEC for the amendment or supplement of either Registration Statement or for additional information. (d) Upon Bancorp's request, Chart will cause its independent certified public accountants to prepare and deliver to Bancorp's Conversion agent and/or underwriter a "comfort" letter, dated the effective date of the Conversion Registration Statement and the Effective Date, with respect to certain financial information regarding Chart, in form and substance which is customary in transactions of the nature of the Conversion. 7.4. SHAREHOLDER APPROVAL. Chart agrees to take, in accordance with applicable law and the Chart Charter and the Chart Bylaws, all action necessary to call, give notice of, convene, and hold as soon as reasonably practicable a meeting of its stockholders to consider and vote upon the approval of this Agreement and any other matters required to be approved by Chart's stockholders for consummation of the Transactions (including any adjournment or postponement, the "CHART MEETING"). Except with the prior approval of Bancorp, no other matters shall be submitted for the approval of Chart stockholders at Chart Meeting. Subject to Section 7.9, the Chart Board shall at all times prior to and during such meeting recommend such approval (the "CHART BOARD RECOMMENDATION") and shall take all reasonable lawful action to solicit such approval by its stockholders. Bancorp, as the sole stockholder of Bancorp Bank, has approved this Agreement and any other matters required to be approved by Bancorp Bank's stockholders for consummation of the Transactions. 7.5. REGULATORY FILINGS. (a) Each of Bancorp and Chart and their respective Subsidiaries shall cooperate and use their respective commercially-reasonable efforts to promptly prepare all documentation, to effect all filings and to obtain all permits, consents, approvals and authorizations of all third parties and Governmental Authorities necessary or advisable to consummate the Transactions and any other transactions contemplated by this Agreement or any other Transaction Document and to comply - 59 - with the terms and conditions of all such permits, consents, approvals and authorizations of all such Governmental Authorities; and any initial filings with Governmental Authorities (other than the Conversion Prospectus and the Proxy Statement) shall be made by Bancorp as soon as reasonably practicable after the execution hereof. Each of Bancorp and Chart shall have a reasonable time to review such filings in advance, and to the extent practicable each shall consult with the other, in each case subject to applicable laws relating to the exchange of information, with respect to all written information submitted to any third party or any Governmental Authority in connection with the transactions contemplated by this Agreement. In exercising the foregoing right, each of such parties agrees to act reasonably and as promptly as practicable. Each party hereto agrees that it shall consult with the other parties hereto with respect to the obtaining of all permits, consents, approvals and authorizations of all third parties and Governmental Authorities necessary or advisable to consummate the transactions contemplated by this Agreement or any other Transaction Document, and each party shall keep the other parties apprised of the status of material matters relating to completion of the transactions contemplated hereby. (b) Each party agrees, upon request, to furnish the other parties with all information concerning itself, its Subsidiaries, directors, officers and stockholders and such other matters as may be reasonably necessary or advisable in connection with any filing, notice or application made by or on behalf of such other parties or any of their respective Subsidiaries to any third party or Governmental Authority. 7.6. PRESS RELEASES. Chart and Bancorp shall consult with each other before issuing any press release with respect to the Transactions or this Agreement and shall not issue any such press release or make any such public statements without the prior consent of the other party's Authorized Representative, which shall not be unreasonably withheld; provided, however, that a party may, without the prior consent of the other party's Authorized Representative (but after such consultation, to the extent practicable in the circumstances), issue such press release or make such public statements as may upon the advice of outside counsel be required by law or the (to the extent the same become applicable) rules or regulations of Nasdaq or other regulatory authority. Chart and Bancorp shall cooperate to develop all public announcement materials and make appropriate management available at presentations related to the Transactions as reasonably requested by the other party. 7.7. ACCESS; INFORMATION. (a) Chart agrees that upon reasonable notice and subject to applicable laws relating to the exchange of information, it shall afford Bancorp and Bancorp's officers, employees, counsel, accountants and other authorized representatives such access during normal business hours throughout the period prior to the Effective Time to the books, records (including, without limitation, Tax Returns and work papers of independent auditors), properties and personnel and to such other information as Bancorp may reasonably request and, during such period, it shall furnish promptly to Bancorp all information concerning its business, properties and personnel as Bancorp may reasonably request. Representatives of Chart's senior management will meet periodically with representatives of Bancorp to coordinate post-closing integration planning, including working toward conforming Chart's and Bancorp's asset/liability management, lending practice, credit review and administrative and related policies and practices. - 60 - (b) Bancorp agrees that upon reasonable notice and subject to applicable laws relating to the exchange of information, it shall afford Chart and its authorized representatives such access to Bancorp's personnel as Chart may reasonably request and to such information relating to Bancorp as Chart may reasonably request. (c) Each party agrees that it will not, and will cause its representatives not to, use any information obtained pursuant to this Section 7.7 (as well as any other information obtained prior to the date hereof in connection with the entering into of this Agreement) for any purpose unrelated to the consummation of the transactions contemplated by this Agreement. Subject to the requirements of law, each party shall keep confidential, and shall cause its representatives to keep confidential, all information and documents obtained pursuant to this Section 7.7 (as well as any other information obtained prior to the date hereof in connection with the entering into of this Agreement) unless such information (i) was already known to such party, (ii) becomes available to such party from other sources not known by such party to be bound by a confidentiality obligation, (iii) is disclosed with the prior written approval of the party to which such information pertains or (iv) is or becomes readily ascertainable from publicly available sources. In the event that this Agreement is terminated or the transactions contemplated by this Agreement shall otherwise fail to be consummated, each party shall promptly cause all copies of documents or extracts thereof containing information and data as to another party hereto to be returned to the party which furnished the same. No investigation by any party of the business and affairs of any other party shall affect or be deemed to modify or waive any representation, warranty, covenant or agreement in this Agreement, or the conditions to any party's obligation to consummate the transactions contemplated by this Agreement. 7.8. AFFILIATES. Chart shall use its commercially-reasonable efforts to identify those Persons who may be deemed to be "affiliates" of Chart within the meaning of Rule 145 promulgated by the SEC under the Securities Act (the "CHART AFFILIATES") and to cause each Person so identified to deliver to Bancorp as soon as practicable, and in any event prior to the date of Chart Meeting, a written agreement ("AFFILIATE AGREEMENT") to comply with the requirements of Rule 145 under the Securities Act in connection with the sale or other transfer of Bancorp Common Stock received in the Merger, which agreement shall be in a form reasonably satisfactory to Chart and Bancorp. 7.9. ACQUISITION PROPOSAL. Chart agrees that neither it nor any of its Subsidiaries nor any of Chart's or any of Subsidiary's, officers, directors, employees, agents or representatives (the "REPRESENTATIVES") shall, directly or indirectly, initiate, solicit, encourage or otherwise facilitate (including without limitation by way of furnishing confidential information or data) any inquiries regarding or the making of any Acquisition Proposal (other than by Bancorp). Chart further agrees that neither it nor any of its Subsidiaries nor any of Chart's or any of Subsidiary's Representatives shall, directly or indirectly, engage in any negotiations concerning, or provide any confidential information or data to, or have any discussions with, any Person relating to an Acquisition Proposal or enter into any agreement, arrangement or understanding with respect to an Acquisition Proposal or requiring it (or conditioned upon requiring it) to abandon, terminate or fail to consummate the Merger or any other transactions contemplated by this Agreement; provided, however, that nothing contained in this Agreement shall prevent Chart or Chart Board between the date of this Agreement and prior to the date of Chart Meeting from (A) providing information in response to a request therefor by a Person who has made an unsolicited bona fide - 61 - written Acquisition Proposal if Chart Board receives from the Person so requesting such information an executed confidentiality agreement no less favorable to it than the Confidentiality Agreement entered into on June 3, 2004 by Bancorp and Chart (and Chart shall enforce and not waive any provision of any confidentiality agreement entered into with any such Person contemplated by this Section 7.9); (B) engaging in any negotiations or discussions with any Person who has made an unsolicited bona fide written Acquisition Proposal; or (C) recommending such an Acquisition Proposal to the stockholders of Chart, if and only to the extent that, (i) in each such case referred to in clause (A), (B) or (C) above, Chart Board determines in good faith (after consultation with outside legal counsel) and by a majority vote of the entire Chart Board that such action would be required in order for its directors to comply with their respective fiduciary duties under applicable law, (ii) in each such case referred to in clause (A) or (B) above, Chart Board also determines in good faith (after consultation with its financial advisor) that such Acquisition Proposal, if accepted, is reasonably likely to lead to a Superior Proposal, and (iii) in the case referred to in clause (C) above, (w) Chart Board also determines in good faith (after consultation with its financial advisor) and by a majority of the entire Chart Board that such Acquisition Proposal is a Superior Proposal, (x) Chart Board has given Bancorp five (5) Business Days' prior written notice of its intention to recommend such Acquisition Proposal to the stockholders of Chart, (y) Chart Board has considered any changes to the Per Share Merger Consideration and to this Agreement (if any) proposed by Bancorp, and (z) Chart Board has determined in good faith and by a majority vote of the entire Chart Board, after consultation with Chart's outside legal counsel and after consultation with its financial advisor, that such unsolicited proposal remains a Superior Proposal even after the changes proposed by Bancorp. A "Superior Proposal" shall be a bona fide Acquisition Proposal for 100% of the outstanding securities of Chart that is reasonably likely to be consummated, taking into account all legal, financial and regulatory aspects of the proposal and the Person making the proposal and, if consummated, is reasonably likely to result in a transaction more favorable to Chart's stockholders from a financial point of view than the Merger. Chart agrees that it will immediately cease and cause to be terminated any existing activities, discussions or negotiations with any parties conducted heretofore with respect to any Acquisition Proposals and shall request the return or destruction of all confidential information provided to any such parties prior to the date of this Agreement. Chart agrees that it will notify Bancorp immediately if any inquiries, proposals or offers are received by, any such information is requested from, or any discussions or negotiations are sought to be initiated or continued with, any of its Representatives relating to an Acquisition Proposal. Chart will promptly (within one Business Day) advise Bancorp following receipt of any Acquisition Proposal and the substance thereof (including the identity of the Person making such Acquisition Proposal), and will keep Bancorp apprised of any related developments, discussions and negotiations (including the terms and conditions (and any amendments or modifications thereto) of the Acquisition Proposal) on a current basis. Chart will use its commercially-reasonable efforts to enforce (and will not waive any provisions of) any confidentiality or similar agreement entered into by it or on its behalf by Ryan Beck & Co. LLC or otherwise relating to a potential Acquisition Proposal. 7.10. CERTAIN POLICIES. Prior to the Effective Date, each of Chart and its Subsidiaries shall, consistent with GAAP and applicable banking laws and regulations, modify or change its loan, OREO, accrual, reserve, tax, litigation and real estate valuation policies and practices (including loan classifications and levels of reserves) so as to be applied on a basis that is - 62 - consistent with that of Bancorp; provided, however, that no such modifications or changes need be made prior to the satisfaction of all of the conditions set forth in Article VIII; and further provided that in any event, no accrual or reserve made by Chart or any of its Subsidiaries pursuant to this Section 7.10 shall constitute or be deemed to be a breach, violation of or failure to satisfy any representation, warranty, covenant, agreement, condition or other provision of this Agreement or otherwise be considered in determining whether any such breach, violation or failure to satisfy shall have occurred. The recording of any such adjustments shall not be deemed to imply any misstatement of previously furnished financial statements or information and shall not be construed as concurrence of Chart or its management with any such adjustments. 7.11. NASDAQ LISTING. Bancorp agrees to use its best efforts to list, prior to the Effective Date, on the Nasdaq the shares of Bancorp Common Stock to be issued in connection with the Conversion or the Merger. 7.12. INDEMNIFICATION. (a) From and after the Effective Time, Bancorp (the "INDEMNIFYING PARTY") shall indemnify and hold harmless each present and former director, officer and employee of Chart or a Chart Subsidiary, as applicable, determined as of the Effective Time (each an "INDEMNIFIED PARTY" and collectively the "INDEMNIFIED PARTIES") against any costs or expenses (including reasonable attorneys' fees), judgments, fines, losses, claims, damages or liabilities incurred in connection with any claim, action, suit, proceeding or investigation, civil or criminal, brought or threatened to be brought in or before any court, tribunal, administrative or legislative body or agency, arising out of matters existing or occurring at or prior to the Effective Time, whether asserted or claimed prior to, at or after the Effective Time, arising in whole or in part out of, or pertaining to the fact that he or she was a director, officer or employee of Chart or any Chart Subsidiary or is or was serving at the request of Chart or any of Chart Subsidiaries as a director, officer or employee, of another corporation, partnership, joint venture, trust or other enterprise, including without limitation matters related to the negotiation, execution and performance of this Agreement or any of the transactions contemplated hereby (a "PROCEEDING"), to the fullest extent which such Indemnified Parties would be entitled under the Chart Charter and the Chart Bylaws as in effect as of the date hereof (subject to 7.12(b)). (b) Any Indemnified Party wishing to claim indemnification under this Section 7.12, upon learning of any such claim, action, suit, proceeding or investigation, shall promptly notify the Indemnifying Party, but the failure to so notify shall not relieve the Indemnifying Party of any liability it may have to such Indemnified Party if such failure does not actually prejudice the Indemnifying Party. In the event that any such claim, action, suit, proceeding or investigation is threatened or brought (whether before or after the Effective Time), the Indemnified Parties may retain counsel reasonably satisfactory to the Indemnifying Party; provided, however, that, (i) the Indemnifying Party shall have the right to assume the defense thereof (provided that the Indemnifying Party confirms in writing to the Indemnified Party its obligation to indemnify such party to the extent required by this Agreement and provided, further, that the Indemnifying Party is at least "adequately capitalized" as defined in the relevant prompt corrective action regulations) and upon such assumption the Indemnifying Party shall not be liable to such Indemnified Parties for any legal expenses of other counsel or any other expenses subsequently incurred by such Indemnified Parties in connection with the defense thereof, except that if the - 63 - Indemnifying Party elects not to assume such defense or counsel for the Indemnified Parties advises the Indemnified Parties that there are issues which raise conflicts of interest between the Indemnifying Party and the Indemnified Parties, the Indemnified Parties may retain counsel which is reasonably satisfactory to the Indemnifying Party, and the Indemnifying Party shall pay the reasonable fees and expenses of such counsel for the Indemnified Parties (which may not exceed one firm for all Indemnified Parties, unless the proposed counsel for the Indemnified Parties reasonably advises the Indemnified Parties that there are issues which raise conflicts of interest among such parties, in which case the Indemnifying Party shall pay the reasonable fees and expenses of one additional counsel to the extent necessary to avoid such conflict), (ii) the Indemnified Parties will cooperate in the defense of any such matter, (iii) the Indemnifying Party shall not be liable for any settlement effected without its prior written consent (which consent shall not be unreasonably withheld) and (iv) the Indemnifying Party shall have no obligation hereunder in the event that a federal or state banking agency or a court of competent jurisdiction shall ultimately determine, and such determination shall have become final and nonappealable, that indemnification of an Indemnified Party by the Indemnifying Party in the manner contemplated hereby is prohibited by applicable laws and regulations. The Indemnified Party shall be entitled to be reimbursed by the Indemnifying Party for fees and expenses reasonably incurred in connection with any Proceeding as such fees and expenses are incurred (and in advance of the final determination of the underlying claim) ("ADVANCED EXPENSES") if (x) the Indemnified Party provides an undertaking to repay such Advanced Expenses to the Indemnifying Party if such person shall be adjudicated or determined to be not entitled to indemnification pursuant to the indemnification provisions in Bancorp's Charter and/or By-laws, and (y) provides security for such undertaking reasonably acceptable to the Indemnifying Party, if the Board of Directors of the Indemnifying Party requests such security in its sole discretion. (c) Prior the Effective Time, Chart shall purchase an extended reporting period endorsement under its existing directors' and officers' liability insurance coverage for Chart's directors and officers which shall provide such directors and officers with coverage for six years following the Effective Time of not less than the existing coverage under, and have other terms that are substantially the same as and not materially less favorable on the whole to the insured Persons than the directors' and officers' liability insurance coverage presently maintained by Chart. Chart agrees to reasonably cooperate in good faith with Bancorp in order to obtain the lowest premium for such coverage (it being understood, however, that any such carrier will have no less than a Best's Rating of "A"), provided, however, that Chart, in its sole discretion, shall be entitled to fully pre-pay the premium for the entire coverage period and, provided, further, that in no event shall the aggregate premium for such insurance exceed $150,000. Bancorp shall maintain such policies in full force and effect, and will continue to honor the obligations thereunder. (d) If Bancorp or any of its successors or assigns shall consolidate with or merge into any other entity and shall not be the continuing or surviving entity of such consolidation or merger or shall transfer all or substantially all of its assets to any other entity, then and in each case, proper provision shall be made so that the successors and assigns of Bancorp shall assume the obligations set forth in this Section 7.12. 7.13. EMPLOYMENT AND BENEFIT MATTERS. - 64 - (a) As soon as administratively practicable after the Effective Time, Bancorp shall take all reasonable action so that employees of Chart and its Subsidiaries (i) shall receive employee benefits which are no less favorable than those generally afforded to other employees of Bancorp or its Subsidiaries holding similar positions and (ii) shall be entitled to participate in each employee benefit plan, program or arrangement of Bancorp of general applicability (the "GENERALLY APPLICABLE PLANS") to the same extent as similarly-situated employees of Bancorp and its Subsidiaries (it being understood that inclusion of the employees of Chart and its Subsidiaries in the Generally Applicable Plans may occur at different times with respect to different plans). Bancorp shall cause each Generally Applicable Plan in which employees of Chart and its Subsidiaries are eligible to participate to recognize, for purposes of determining eligibility to participate in, the vesting of benefits and for all other purposes (but not for determining the amount of benefits or for determining accrual of benefits) under Generally Applicable Plans, the service of such employees with Chart and its Subsidiaries to the same extent as such service was credited for such purpose by Chart. Employees of Chart and its Subsidiaries will be given credit for past service with Chart for purposes of Bancorp's vacation policy. (b) Notwithstanding anything to the contrary contained herein, Bancorp shall have sole discretion with respect to the determination as to whether or when to terminate, merge or continue any employee benefit plans and programs of Chart or any of its Subsidiaries. To the extent amounts are distributable under Chart Benefit Plans and constitute "eligible rollover distributions" (as defined in Section 402(f)(2)(A) of the Code) said amounts may be rolled over to any tax-qualified Bancorp Benefit Plan that accepts rollover distributions or to any eligible individual retirement account. (c) Except as otherwise expressly provided in this Agreement or in the Payments Agreements, Bancorp shall honor, and Surviving Bank shall continue to be obligated to perform, in accordance with their terms, all benefit obligations to, and contractual rights of, current and former employees of Chart existing as of the Effective Date, as well as all employment, severance, deferred compensation or "change-in-control" agreements, plans or policies of Chart, but only to the extent that such obligations (x) are Previously Disclosed in Sections 4.1(b)(v), 4.1(b)(vii) or 5.16(a) of Chart's Disclosure Schedule and (y) would not involve any payment that would not be permitted under Section 4.2. Bancorp acknowledges that the consummation of the Merger will constitute a "change-in-control" of Chart for purposes of any employee benefit plans, agreements and arrangements of Chart. (d) If employees of Chart or any of its Subsidiaries become eligible to participate in a medical, dental or health plan of Bancorp, Bancorp shall cause each such plan to (i) waive any preexisting condition limitations to the extent such conditions are covered under the applicable medical, health or dental plans of Bancorp and (ii) waive any waiting period limitation or evidence of insurability requirement which would otherwise be applicable to such employee on or after the Effective Time to the extent such employee had satisfied any similar limitation or requirement under an analogous Plan prior to the Effective Time, and (iii) provide full credit under such plans for any deductibles, co-payments and out-of-pocket expenses incurred by the employees and their beneficiaries during the portion of the calendar year prior to such participation. - 65 - (e) None of Bancorp or a Bancorp Subsidiary shall have any obligation to continue the employment of any employee of Chart or a Chart Subsidiary and nothing contained herein shall give any such Person the right to continued employment with Bancorp or a Bancorp Subsidiary after the Effective Time. Bancorp or a Bancorp Subsidiary shall provide the severance benefits set forth in Section 7.13(e) of Chart's Disclosure Schedule to any employee of Chart or a Chart Subsidiary who is not otherwise covered by a specific termination, severance or change in control agreement and who is terminated by Bancorp or a Bancorp Subsidiary for reasons other than "cause", or who resigns for "good reason," in both cases as defined in Section 7.13(e) of Chart's Disclosure Schedule. (f) Certain employees of Chart or a Chart Subsidiary jointly designated in writing by Chart and Bancorp shall be entitled to receive a "retention" bonus from Chart, a Chart Subsidiary, Bancorp or a Bancorp Subsidiary, as the case may be, in the event such employee remains an employee of Chart, a Chart Subsidiary, Bancorp or a Bancorp Subsidiary, as applicable, until the Effective Date (or in certain cases, through a post-closing transition period, including systems conversion, if applicable), provided that such employee satisfactorily fulfills the duties and responsibilities of the position of such employee through the Effective Date or thereafter, if applicable. The aggregate amount of such retention bonuses shall not exceed the aggregate amount set forth on Section 7.13(f) of Chart's Disclosure Schedule, and the employees entitled to receive retention bonuses and the amount of each such bonus shall be mutually agreed upon in writing by the Chief Executive Officer of Chart and the Chief Executive Officer or Chief Financial Officer of Bancorp. Retention bonuses shall not be payable to any employee of Chart or a Chart Subsidiary who is a party to an employment or other agreement that provides severance benefits in the event of a change in control of Chart. 7.14. PAYMENTS AND RELATED AGREEMENTS. Concurrently with the execution of this Agreement by Chart, Bancorp and Bancorp Bank, (i) Bancorp, Chart and Bancorp Bank have entered into a Payments Agreement with each of Richard Bolton Jr. and Richard Bolton Sr. in a form that has been Previously Disclosed (the "PAYMENTS AGREEMENTS"), and (ii) a Consulting and Non-Competition Agreement with each of Mr. Bolton Jr. and Mr. Bolton Sr. in a form that has been Previously Disclosed (the "CONSULTING AGREEMENTS"). 7.15. NOTIFICATION OF CERTAIN MATTERS. Each of Chart and Bancorp shall give prompt notice to the other of any fact, event or circumstance known to it that (i) if it had been known as of the date of this Agreement, would have been required to have been included in Chart's Disclosure Schedule, (ii) is reasonably likely, individually or taken together with all other facts, events and circumstances known to it, to result in any Material Adverse Effect with respect to it, or (iii) would cause or constitute a material breach of any of its representations, warranties, covenants or agreements contained herein. 7.16. UPDATE OF DISCLOSURE SCHEDULES. From time to time prior to the Effective Time, Chart will promptly supplement or amend Chart's Disclosure Schedule in writing to reflect any matter which, if existing, occurring or known at the date of this Agreement, would have been required to be set forth or described in Chart's Disclosure Schedule or which is necessary to correct any information in Chart's Disclosure Schedule which has been rendered inaccurate thereby. In addition, at or prior to the Effective Time, Chart shall provide Bancorp with a written copy of the complete Chart's Disclosure Schedule, marked to show any and all such supplements - 66 - and amendments, and/or, if no such supplements or amendments were made to a particular Section of Chart's Disclosure Schedule, Chart shall provide Bancorp with a certificate signed on behalf of Chart by a duly authorized officer of Chart to such effect. No supplement or amendment to Chart's Disclosure Schedule shall have any effect for the purpose of determining satisfaction of the conditions set forth in Section 8.3(a) hereof or compliance by Chart with the covenants set forth in Article V hereof. 7.17. CURRENT INFORMATION. (a) As soon as practicable, each party will furnish to the other copies of all such financial statements and reports as it or any of its subsidiaries shall send to its stockholders or any Governmental Authority, to the extent any such reports furnished to any such Governmental Authority are not confidential and except as legally prohibited thereby, and will furnish such additional financial data as the other party may reasonably request. (b) Promptly upon receipt thereof, each party will furnish to the other copies of all internal control reports submitted to it and its Subsidiaries by independent auditors in connection with each annual, interim or special audit of the books of it and its Subsidiaries made by such auditors. (c) Each party will promptly notify the other of any material change in its normal course of business or in the operation of properties of it or any of its Subsidiaries and of any governmental complaints, investigations or hearings (or communications indicating that the same may be contemplated), or the institution or the threat of material litigation involving such party or any of its Subsidiaries, and will keep the other party reasonably informed of such events. 7.18. LOAN LOSS RESERVES. During the period from the date of this Agreement to the Effective Time, Chart shall provide Bancorp with any information Bancorp shall reasonably request regarding Chart's Loan Loss Reserves. 7.19. CONTROL OF OTHER PARTY'S BUSINESS. Nothing contained in this Agreement shall give Bancorp, directly or indirectly, the right to control or direct the operations of Chart prior to the Effective Time. Prior to the Effective Time, Chart shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over the operations of Chart and its Subsidiaries. 7.20. BANCORP PRODUCTS AND SERVICES. From and after the date of this Agreement, Bancorp and Chart shall consult on a reasonable basis with each other on the introduction of products and services not currently offered by Chart which Bancorp Bank would expect to make available to customers following the Effective Time; provided, however, that nothing herein shall obligate Chart to offer any such products or services prior to the Effective Time. 7.21. ALCO MANAGEMENT. Chart agrees to manage its assets and liabilities in accordance with Chart's asset and liability management policy as in effect on the date hereof, unless otherwise agreed by the parties. Chart shall not materially amend or modify such policy without the express written consent of Bancorp's Authorized Representative. Chart and Bancorp agree to consult on investment programs to be administered by Chart. - 67 - 7.22. TAX MATTERS. Without the prior written consent of the other party's Authorized Representative, neither Bancorp nor Chart will make or change any election, change an annual accounting period, adopt or change any accounting method, file any amended Tax Return, enter into any closing agreement, settle any Tax claim or assessment relating to it, surrender any right to claim a refund of Taxes, consent to any extension or waiver of the limitation period applicable to any Tax claim or assessment relating to it, or take any other similar action relating to the filing of any Tax Return or the payment of any Tax, if such election, adoption, change, amendment, agreement, settlement, surrender, consent or other action would have the effect of increasing the its Tax liability for any period ending after the Closing Date or decreasing any Tax attribute of it existing on the Closing Date. 7.23. SECTION 16. Prior to the Effective Time, Bancorp shall, as applicable, take all such steps as may be required to cause any acquisitions of Bancorp Common Stock resulting from the transactions contemplated by this Agreement by each individual who may be subject to the reporting requirements of Section 16(a) of the Exchange Act with respect to Bancorp to be exempt under Rule 16b-3 promulgated under the Exchange Act. Chart agrees to promptly furnish Bancorp with all requisite information necessary for Bancorp to take the actions contemplated by this Section 7.23. ARTICLE VIII. CONDITIONS TO CONSUMMATION OF THE MERGER 8.1. CONDITIONS TO EACH PARTY'S OBLIGATIONS TO EFFECT THE MERGER. The respective obligation of each of the parties hereto to consummate the Merger is subject to the fulfillment, where permitted by law, or written waiver by the parties hereto prior to the Closing Date of each of the following conditions: (a) SHAREHOLDER APPROVAL. This Agreement shall have been duly approved by holders of not less than two-thirds of the outstanding shares of Chart Common Stock. (b) CORPORATOR APPROVAL. This Agreement and the Conversion shall each have been duly approved by the requisite percentage of the Bancorp Corporators. (c) REGULATORY APPROVALS. All regulatory approvals required to consummate the Transactions shall have been obtained and shall remain in full force and effect and all statutory waiting periods in respect thereof shall have expired and no such approval shall contain any conditions, restrictions or requirements which Bancorp Board reasonably determines in good faith would, individually or in the aggregate, materially reduce the benefits of the Transactions to such a degree that Bancorp would not have entered into this Agreement had such conditions, restrictions or requirements been known at the date hereof. (d) NO INJUNCTION. No Governmental Authority of competent jurisdiction shall have enacted, issued, promulgated, enforced or entered any statute, rule, regulation, judgment, decree, injunction or other order (whether temporary, preliminary or permanent) which is in effect and prohibits consummation of the Transactions. (e) REGISTRATION STATEMENTS. The Registration Statements shall each have been declared effective under the Securities Act and no stop order suspending the effectiveness of the - 68 - Registration Statement shall have been issued and no proceedings for that purpose shall have been initiated by the SEC and not withdrawn and Bancorp shall have received all required approvals by Governmental Authorities, including the Massachusetts Bank Commissioner and state securities or "blue sky" authorities. (f) NASDAQ LISTING. The shares of Bancorp Common Stock to be issued in the Merger and the Conversion shall have been authorized for listing on the Nasdaq, subject to official notice of issuance. (g) CONVERSION. Bancorp shall have consummated the Conversion, and such Conversion shall have resulted in net proceeds sufficient to enable Bancorp Bank to remain "well-capitalized" under applicable federal banking law and otherwise to meet regulatory capital requirements, in each case after giving effect to the Merger. (h) TAX OPINIONS WITH RESPECT TO MERGER. Bancorp and Bancorp Bank shall have received a letter setting forth the written opinion of Foley Hoag LLP, in form and substance reasonably satisfactory to Bancorp and Bancorp Bank, dated as of the Effective Date, and Chart shall have received a letter setting forth the written opinion of Goodwin Procter LLP, in form and substance reasonably satisfactory to Chart, dated as of the Effective Date, in each case substantially to the effect that, on the basis of the facts, representations and assumptions set forth in such letter, the Merger will constitute a tax-free reorganization described in section 368(a) of the Internal Revenue Code. (i) TAX OPINION WITH RESPECT TO CONVERSIONS. Bancorp shall have received a letter setting forth the written opinion of Foley Hoag LLP, in form and substance required by applicable regulatory authorities and reasonably satisfactory to it and to Chart, dated as of the Effective Date, to the effect that, on the basis of facts, representations and assumptions set forth in such letter, the Conversion will constitute a reorganization within the meaning of Section 368(a) of the Code. 8.2. CONDITIONS TO OBLIGATIONS OF CHART. The obligation of Chart to consummate the Merger is also subject to the fulfillment or written waiver by Chart prior to the Closing Date of each of the following conditions: (a) REPRESENTATIONS AND WARRANTIES. Each of the representations and warranties of Bancorp in this Agreement which is qualified as to materiality shall be true and correct and each such representation or warranty that is not so qualified shall be true and correct in all material respects, in each case as of the date of this Agreement, as applicable, and (except to the extent such representations and warranties speak as of an earlier date, with respect to which such representations and warranties shall be true and correct in all material respects as of such earlier date) as of the Closing Date as though made on and as of the Closing Date; provided, however, that for purposes of this Section 8.2(a), such representations and warranties shall be deemed to be true and correct unless the failure or failures of such representations and warranties to be so true and correct, individually or in the aggregate, and without giving effect to any qualification as to materiality set forth in such representations or warranties, would have a Material Adverse Effect on Bancorp, and Chart shall have received a certificate, dated the Effective Date, signed by the Chief Executive Officer and the Chief Financial Officer of Bancorp to such effect. - 69 - (b) PERFORMANCE OF OBLIGATIONS OF BANCORP. Bancorp shall have performed in all material respects all obligations required to be performed by it under this Agreement at or prior to the Effective Time, and Chart shall have received a certificate, dated the Effective Date, to such effect signed by the Chief Executive Officer and Chief Financial Officer of Bancorp. (c) ABSENCE OF BANCORP CHANGES. From the date of this Agreement through the Closing Date, there shall not have occurred any change that individually or in the aggregate has or could reasonably be expected to have a Material Adverse Effect on Bancorp, provided however, that solely for the purposes of determining whether this condition has been fulfilled, Material Adverse Effect shall not be deemed to include the impact of (1) changes in banking and similar laws, rules or regulations of general applicability or interpretations thereof by Governmental Authorities, (2) changes in GAAP or regulatory accounting requirements applicable to financial institutions and their holding companies generally, (3) changes in economic conditions affecting financial institutions generally, including but not limited to, changes in general levels of interest rates generally, (4) direct effects of compliance with this Agreement on the operating performance of Bancorp, including expenses incurred by Bancorp in consummating the transactions contemplated by this Agreement and (5) the effects of any action or omission otherwise contemplated by this Agreement or any other Transaction Document. (d) OTHER ACTIONS. Bancorp shall have furnished Chart with such certificates of its respective officers or others and such other documents to evidence fulfillment of the conditions set forth in Sections 8.1 and 8.2 as Chart may reasonably request. 8.3. CONDITIONS TO OBLIGATIONS OF BANCORP. The obligations of Bancorp to consummate the Merger are also subject to the fulfillment or written waiver by Bancorp prior to the Closing Date of each of the following conditions: (a) REPRESENTATIONS AND WARRANTIES. Each of the representations and warranties of Chart in this Agreement which is qualified as to materiality shall be true and correct and each such representation or warranty that is not so qualified shall be true and correct in all material respects, in each case as of the date of this Agreement, and (except to the extent such representations and warranties speak as of an earlier date, with respect to which such representations and warranties shall be true and correct in all material respects as of such earlier date) as of the Closing Date as though made on and as of the Closing Date; provided, however, that for purposes of this Section 8.3(a), such representations and warranties shall be deemed to be true and correct unless the failure or failures of such representations and warranties to be so true and correct, individually or in the aggregate, and without giving effect to any qualification as to materiality set forth in such representations or warranties, would have a Material Adverse Effect on Chart, and Bancorp shall have received a certificate, dated the Effective Date, signed by the Chief Executive Officer and the Chief Financial Officer of Chart to such effect. (b) PERFORMANCE OF OBLIGATIONS OF CHART. Chart shall have performed in all material respects all obligations required to be performed by it under this Agreement at or prior to the Effective Time, and Bancorp shall have received a certificate, dated the Effective Date, to such effect signed by the Chief Executive Officer and Chief Financial Officer of Chart. (c) DISSENTING SHARES. Dissenting Shares shall not represent 10% or more of the - 70 - outstanding Chart Common Stock. (d) PAYMENTS AGREEMENTS. The Payments Agreements referred to in Section 7.14 shall have been duly executed and delivered by the respective parties thereto and shall be in full force and effect, and each party thereto other than Bancorp shall have performed in all material respects all obligations required to be performed by it thereunder at or prior to the Effective Time. (e) CONSENTS UNDER AGREEMENTS. The consent, approval or waiver of each Person (other than regulatory approvals contemplated in Section 8.1(c)) whose consent or approval shall be required in order to permit (i) the lawful consummation of the Merger and (ii) the succession by Surviving Bank pursuant to the Merger to any obligation, right or interest of Chart or any of Chart's Subsidiaries under any loan or credit agreement, note, mortgage, indenture, lease, license or other agreement or instrument shall have been obtained, except for such consents the failure of which to be obtained would not, individually or in the aggregate, have a Material Adverse Effect on Bancorp after giving effect to the consummation of the Transactions, and none of such permits, consents, waivers, clearances, approvals and authorizations shall contain any term or condition which would, individually or in the aggregate, have a Material Adverse Effect on Chart or Bancorp. (f) NO PARACHUTE PAYMENTS. Neither Chart or any of Chart's Subsidiaries shall have taken any action or made any payments that would result, either individually or in the aggregate, in any violation of the requirements set forth in Section 4.2. (g) ABSENCE OF CHART CHANGES. From the date of this Agreement through the Closing Date, there shall not have occurred any change that individually or in the aggregate has or could reasonably be expected to have a Material Adverse Effect on Chart, provided however, that solely for the purposes of determining whether this condition has been fulfilled, Material Adverse Effect shall not be deemed to include the impact of (1) changes in banking and similar laws, rules or regulations of general applicability or interpretations thereof by Governmental Authorities, (2) changes in GAAP or regulatory accounting requirements applicable to financial institutions and their holding companies generally, (3) changes in economic conditions affecting financial institutions generally, including but not limited to, changes in general levels of interest rates generally, (4) direct effects of compliance with this Agreement on the operating performance of Chart, including expenses incurred by Chart in consummating the transactions contemplated by this Agreement and (5) the effects of any action or omission taken with the prior consent of Bancorp or as otherwise contemplated by this Agreement or any other Transaction Document. (h) OTHER ACTIONS. Chart shall have furnished Bancorp with such certificates of its officers or others and such other documents to evidence fulfillment of the conditions set forth in Sections 8.1 and 8.3 as Bancorp may reasonably request. ARTICLE IX. TERMINATION 9.1. TERMINATION. This Agreement may be terminated and the Merger and the other transactions contemplated by this Agreement may be abandoned at any time prior to the - 71 - Effective Time, notwithstanding any requisite approval and adoption of this Agreement and the transactions contemplated in this Agreement by the stockholders of Chart: (a) MUTUAL CONSENT. By mutual consent of Bancorp and Chart, if the Board of each so determines by vote of a majority of the members of its entire Board. (b) DELAY. By either Bancorp or Chart (if its Board so determines by vote of a majority of the members of its entire Board) if (i) the Effective Time shall not have occurred on or before July 15, 2005 or such later date as the parties may have agreed upon in writing (the "EXPIRATION DATE"), except to the extent that the failure of the Merger then to be consummated arises out of or results from the knowing action or inaction of (i) the party seeking to terminate pursuant to this Section 9.1(b)) or (ii) any of the Shareholders (if Chart is the party seeking to terminate), which action or inaction is in violation of its obligations under this Agreement or, in the case of the Shareholders, his, her or its obligations under the relevant Voting Agreement. (c) NO APPROVAL. By Chart or Bancorp, if its Board so determines by a vote of a majority of the members of its entire Board, in the event that the approval of any Governmental Authority required for consummation of the Merger and the other transactions contemplated by this Agreement (other than the Conversion) shall have been denied by final nonappealable action of such Governmental Authority or an application therefor shall have been permanently withdrawn at the request of a Governmental Authority. (d) NO CONVERSION. By Chart or Bancorp, if its Board so determines by a vote of a majority of the members of its entire Board, in the event that (i) the requisite approval of the Conversion by Bancorp's Board of Trustees or its Corporators is not received; (ii) the approval of any Governmental Authority required for consummation of the Conversion shall have been denied by final nonappealable action of such Governmental Authority or an application therefor shall have been permanently withdrawn at the request of a Governmental Authority; or (iii) if any court of competent jurisdiction or other governmental authority shall have issued an order, decree, ruling or taken any other action restraining, enjoining or otherwise prohibiting the Conversion and such order, decree, ruling or other action shall have become final and nonappealable. (e) BREACH. At any time prior to the Effective Time, by Bancorp or Chart (provided that the terminating party is not then in material breach of any representation, warranty, covenant or other agreement contained herein) if its Board so determines by vote of a majority of the members of its entire Board, in the event of: (i) a material breach by Bancorp or Chart, as the case may be, of any representation or warranty contained herein, which breach would constitute, if occurring or continuing on the Closing Date, the failure of the conditions set forth in Section 8.2(a) or 8.3(a), as the case may be, and which cannot be or has not been cured within 30 days after the giving of written notice to the breaching party or parties of such breach; or (ii) a material breach by Bancorp or Chart, as the case may be, of any of the covenants or agreements contained herein, which breach cannot be or has not been cured within 30 days after the giving of written notice to the breaching party or parties of such breach. (f) NO SHAREHOLDER/CORPORATOR APPROVAL. By either Bancorp or Chart (provided, that the terminating party shall not be in material breach of any of its respective obligations under - 72 - Section 7.2 and 7.4) if (i) any approval of the stockholders of Chart required for the consummation of the Merger shall not have been obtained by reason of the failure to obtain the required vote at a duly held meeting of Chart's stockholders or at any adjournment or postponement thereof, or, if such meeting of stockholders shall not have been held or shall have been canceled prior to the Expiration Date or (ii) any approval of the Corporators of Bancorp required for the consummation of the Transactions shall not have been obtained by reason of the failure to obtain the required vote at a duly held meeting of Bancorp's Corporators or at any adjournment or postponement thereof, or, if such meeting of Corporators shall not have been held or shall have been canceled prior to the Expiration Date. (g) FAILURE TO RECOMMEND. By Bancorp if, at any time prior to the Chart Meeting, (i) Chart shall have materially breached Section 7.9 or (ii) the Chart Board shall have failed to make its recommendation referred to in Section 7.4, withdrawn such recommendation or modified or changed such recommendation in a manner adverse in any respect to the interests of Bancorp, or (iii) Chart shall have materially breached its obligations to call, give notice of, convene and hold the Chart Meeting in accordance with Section 7.4. (h) CERTAIN TENDER OFFERS. By Bancorp, if a Tender Offer is commenced, other than by Bancorp or a Subsidiary thereof, and the Chart Board recommends that the stockholders of Chart tender their shares in such Tender Offer or otherwise fails to recommend that such stockholders reject such Tender Offer. 9.2. EFFECT OF TERMINATION; EXPENSES. (a) In the event of the termination of this Agreement pursuant to Section 9.1, this Agreement shall forthwith become void (except as set forth in Section 10.1), subject to Sections 9.3 and 9.4, and there shall be no liability on the part of any party hereto, except (i) each party shall remain liable in any action at law or otherwise for any liabilities or damages arising out of its gross negligence or willful breach of any provision of this Agreement, and (ii) as otherwise provided in this Section 9.2 or in Section 9.3 or Section 9.4. (b) If: (i) this Agreement is terminated as a result of any breach of a representation, warranty, covenant or other agreement which is caused by the gross negligence or willful or intentional breach of a party hereto, such party shall be liable to the other party for all out-of-pocket costs and expenses, including, without limitation, the reasonable fees and expenses of lawyers, accountants and investment bankers, incurred by such other party in connection with the entering into of this Agreement and the carrying out of any and all acts contemplated hereunder ("EXPENSES"); or (ii) this Agreement is terminated pursuant to Section 9.1(d) (other than under circumstances in which a breach of a representation or warranty of Chart or a breach by Chart of one or more covenants in this Agreement has materially adversely affected Bancorp's ability to obtain the necessary votes or to complete the Conversion in a timely manner), then Bancorp shall be liable to Chart for Chart's Expenses; or - 73 - (iii) Bancorp has not consummated the Conversion by July 15, 2005 (and was obligated under this Agreement as of immediately prior to such date to use its reasonable best efforts to consummate the Conversion) under circumstances where Section 9.3(a)(i) does not apply, Bancorp shall be liable to Chart for Chart's Expenses; provided that Bancorp shall not be obligated to make any payment under this Section 9.2(b)(iii) under circumstances in which a breach of a representation or warranty of Chart or a breach by Chart of one or more covenants in this Agreement has materially adversely affected Bancorp's ability to complete the Conversion in a timely manner; provided, however, that the maximum amount any party shall be liable to pay to the other party for Expenses pursuant to this Section 9.2(b) shall be limited to $500,000. The payment of Expenses is not an exclusive remedy, but is in addition to any other rights or remedies available to the parties hereto (whether at law or in equity) arising out of the gross negligence of a party or willful breach of any provision of this Agreement or under this Agreement. 9.3. BANCORP SPECIAL PAYMENT. (a) PAYMENT EVENTS. As a condition of Chart's willingness to, and in order to induce Chart to, enter into this Agreement, and to reimburse Chart for incurring the damages, costs and expenses related to entering into this Agreement and consummating the transactions contemplated by this Agreement, Bancorp hereby agrees to pay to Chart, as liquidated damages and in lieu of any other rights or remedies under this Agreement, a payment in the amount of $2,300,000 (as such amount may be adjusted pursuant to Section 9.3(d), the "BANCORP SPECIAL PAYMENT") if and only if: (i) Bancorp has failed to consummate the Conversion by July 15, 2005, as a result of a material failure to perform or comply with any of its covenants or agreements herein; or (ii) Chart has terminated this Agreement in accordance with Section 9.1(e) because Bancorp has intentionally or willfully breached any of its representations or warranties herein or intentionally and willfully failed to perform or comply with any of its covenants or agreements herein, in each case to such extent as to permit such termination. (b) DURATION OF CHART'S RIGHTS WITH RESPECT TO BANCORP SPECIAL PAYMENT. Notwithstanding any other provision of this Agreement, the provisions of this Section 9.3 shall remain in effect and shall be enforceable by Chart or any successor in interest notwithstanding the expiration or any termination of this Agreement. (c) EXCLUSIVITY OF REMEDY. Notwithstanding anything to the contrary set forth in this Agreement, if Bancorp pays or causes to be paid (as required by this agreement) to Chart the Bancorp Special Payment, neither Bancorp nor any Bancorp Subsidiary will have any further obligations or liabilities to Chart with respect to this Agreement or the transactions contemplated by this Agreement. - 74 - (d) ADJUSTMENT TO AMOUNT OF BANCORP SPECIAL PAYMENT. The amount of the Bancorp Special Payment shall be reduced by the amount of any Expenses paid by Bancorp to Chart pursuant to Section 9.2(b). (e) PAYMENT REQUIRED. Any payment required under this Section 9.3 will be payable by Bancorp to Chart (by wire transfer of immediately available funds to an account designated by Chart) within five Business Days after demand by Chart. 9.4. CHART SPECIAL PAYMENT. As a condition of Bancorp's willingness, and in order to induce Bancorp, to enter into this Agreement and to reimburse Bancorp for incurring the damages, costs and expenses related to entering into this Agreement and consummating the transactions contemplated by this Agreement, Chart will pay to Bancorp the sum of $2,300,000 (as such amount may be adjusted pursuant to Section 9.4(f), the "CHART SPECIAL PAYMENT"), if and only if a Payment Event (as hereinafter defined) shall have occurred before the Special Payment Termination Date (as hereinafter defined) determined in accordance with Section 9.4(c). (a) "PAYMENT EVENT" shall mean any of the following events: (i) without Bancorp's prior written consent, Chart or shareholders of Chart shall have entered into an agreement to effect, or shall have consummated, a Change in Control Transaction; (ii) This Agreement shall have been terminated by Bancorp pursuant to Section 9.1(g) or 9.1(h); (iii) Bancorp shall have terminated this Agreement in accordance with Section 9.1(e) because Chart has intentionally or willfully breached any of its representations or warranties herein or intentionally and willfully failed to perform or comply with any of its covenants or agreements herein, in each case to such extent as to permit such termination; or (iv) This Agreement shall have been terminated by either party pursuant to Section 9.1(f)(i). (b) A "TIME EXTENSION EVENT" shall mean any of the following events: (i) any person (other than Bancorp or any Bancorp Subsidiary) shall have commenced a Tender Offer; or (ii) Any person (other than Bancorp or any Bancorp Subsidiary) shall have acquired beneficial ownership (as such term is defined in Rule 13d-3 promulgated under the Exchange Act) of or has the contractual right to acquire beneficial ownership of, or any "group" (as such term is defined in Section 13(d)(3) of the Exchange Act) shall have been formed which beneficially owns or has the contractual right to acquire beneficial ownership of, 15% or more of the then outstanding shares of Chart Common Stock; or (iii) following an Acquisition Proposal, the holders of Chart Common Stock shall - 75 - not have approved this Agreement at the meeting of such stockholders held for the purpose of voting on this Agreement; or (iv) following the occurrence of an Acquisition Proposal: (1) the meeting of Chart stockholders held for the purpose of voting on this Agreement shall not have been held in violation of Chart's obligations set forth in Section 7.4 hereof, or shall have been canceled prior to termination of this Agreement, (2) Chart's Board shall have withdrawn or modified in a manner adverse to Bancorp the recommendation of Chart's Board with respect to this Agreement and the Merger, or (3) Chart shall have willfully or intentionally breached any representation, warranty, covenant or obligation contained in this Agreement and such breach would entitle Bancorp to terminate this Agreement under Section 9.1(e) hereof (without regard to the cure period provided for therein unless such cure is promptly effected without jeopardizing consummation of the Merger pursuant to the terms of this Agreement). (c) SPECIAL PAYMENT TERMINATION DATE. The "SPECIAL PAYMENT TERMINATION DATE" shall be the earliest to occur of: (i) The Effective Time of the Merger, (ii) The date that is 12 months after termination or expiration of this Agreement following the occurrence of a Time Extension Event; (iii) The date on which the Agreement is terminated in accordance with its terms, BUT ONLY IF such termination takes place PRIOR to the occurrence of a Payment Event or a Time Extension Event. (d) DURATION OF BANCORP'S RIGHTS WITH RESPECT TO CHART SPECIAL PAYMENT. Notwithstanding any other provision of this Agreement, the provisions of this Section 9.4 shall remain in effect and shall be enforceable by Bancorp or any successor in interest notwithstanding the expiration or any termination of this Agreement. (e) EXCLUSIVITY OF REMEDY. Notwithstanding anything to the contrary set forth in this Agreement, if Chart pays or causes to be paid (as required by this agreement) to Bancorp or to Bancorp Bank the Chart Special Payment, neither Chart nor any Chart Subsidiary will have any further obligations or liabilities to Bancorp or Bancorp Bank with respect to this Agreement or the transactions contemplated by this Agreement. (f) ADJUSTMENT TO AMOUNT OF CHART SPECIAL PAYMENT. The amount of Chart Special Payment shall be reduced by the amount of any Expenses paid by Chart to Bancorp pursuant to Section 9.2(b). (g) EFFECT ON STANDSTILL ARRANGEMENTS. In the event Chart pays to Bancorp the Chart - 76 - Special Payment, any standstill provisions contained in the Confidentiality Agreements referred to in Section 7.9 shall terminate. (h) PAYMENT REQUIRED. Any payment required under this Section 9.4 will be payable by Chart to Bancorp (by wire transfer of immediately available funds to an account designated by Bancorp) within five Business Days after demand by Bancorp. ARTICLE X. MISCELLANEOUS 10.1. SURVIVAL. No representations, warranties, agreements and covenants contained in this Agreement shall survive the Effective Time (other than agreements or covenants contained herein that by their express terms are to be performed after the Effective Time, and the Voting Agreements, the Release Agreements, the Consulting Agreements and the Payments Agreements, which shall terminate in accordance with the terms thereof) or the termination of this Agreement if this Agreement is terminated prior to the Effective Time (other than Sections 7.7(c) and 9.4, and, excepting Section 10.12 hereof, this Article X, which shall survive any such termination). 10.2. WAIVER; AMENDMENT. Prior to the Effective Time, any provision of this Agreement may be (i) waived by the party benefited by the provision or (ii) amended or modified at any time, by an agreement in writing among the parties hereto executed in the same manner as this Agreement, except that after Chart Meeting no amendment shall be made which changes in kind or reduces in amount the Merger Consideration without the further approval of Chart's stockholders. 10.3. COUNTERPARTS AND FACSIMILE SIGNATURES. This Agreement and the exhibits hereto may be executed in one or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties, it being understood that all parties need not sign the same counterpart. Facsimile execution and delivery of this Agreement and the exhibits hereto by any of the parties shall be legal, valid and binding execution and delivery of such document for all purposes. 10.4. GOVERNING LAW. This Agreement shall be governed by, and interpreted in accordance with, the laws of The Commonwealth of Massachusetts applicable to contracts made and to be performed entirely within such state. 10.5. EXPENSES. Except as otherwise provided in Section 9.2, each party hereto will bear all expenses incurred by it in connection with this Agreement and the transactions contemplated hereby, including fees and expenses of its own financial consultants, accountants and counsel and, in the case of Bancorp, the registration fee to be paid to the SEC in connection with the Registration Statement, except that expenses of printing the Proxy Statement shall be shared equally between Chart and Bancorp. 10.6. NOTICES. All notices, requests and other communications hereunder to a party shall be in writing and shall be deemed given if personally delivered, telecopied (with confirmation) or mailed by registered or certified mail (return receipt requested) to such party at its address set forth below or such other address as such party may specify by notice to the parties hereto. - 77 - If to Chart to: ChartBank 295 Weston Street Waltham, Massachusetts 02453 Attention: President & Chief Executive Officer Fax: With a copy to: Goodwin Procter LLP Exchange Place Boston, Massachusetts 02109 Attention: William P. Mayer Fax: (617) 532-1231 If to Bancorp to: Benjamin Franklin Bancorp, M.H.C. 58 Main Street P.O. Box 309 Franklin, Massachusetts 02038-0927 Attention: President & Chief Executive Officer Fax: (508) 520-8364 With a copy to: Foley Hoag LLP 155 Seaport Boulevard Boston, Massachusetts 02210 Attention: Peter W. Coogan Fax: (617) 832-7000 10.7. ENTIRE UNDERSTANDING; NO THIRD PARTY BENEFICIARIES. This Agreement and the other Transaction Documents represent the entire understanding of the parties hereto and thereto with reference to the transactions contemplated hereby and thereby and this Agreement and the other Transaction Documents supersede any and all other oral or written agreements heretofore made. Except for the Indemnified Parties' right to enforce Bancorp's obligation under Section 7.12, which are expressly intended to be for the irrevocable benefit of, and shall be enforceable by, each Indemnified Party and his or her heirs and representatives, nothing in this Agreement, expressed or implied, is intended to confer upon any Person, other than the parties hereto or their respective successors, any rights, remedies, obligations or liabilities under or by reason of this Agreement. 10.8. SEVERABILITY. Except to the extent that application of this Section 10.8 would have a Material Adverse Effect on Chart or Bancorp, any term or provision of this Agreement which is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the - 78 - remaining terms and provisions of this Agreement or affecting the validity or enforceability of any of the terms or provisions of this Agreement in any other jurisdiction. If any provision of this Agreement is so broad as to be unenforceable, the provision shall be interpreted to be only so broad as is enforceable. In all such cases, the parties shall use their commercially-reasonable efforts to substitute a valid, legal and enforceable provision which, insofar as practicable, implements the original purposes and intents of this Agreement. 10.9. ENFORCEMENT OF THE AGREEMENT. The parties hereto agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in any court of the United States or any state having jurisdiction, this being in addition to any other remedy to which they are entitled at law or in equity. 10.10. INTERPRETATION. When a reference is made in this Agreement to Sections, Exhibits or Schedules, such reference shall be to a Section of, or Exhibit or Schedule to, this Agreement unless otherwise indicated. The table of contents and headings contained in this Agreement are for reference purposes only and are not part of this Agreement. Whenever the words "include," "includes" or "including" are used in this Agreement, they shall be deemed to be followed by the words "without limitation." References to sections include subsections which are part of the related sections (e.g. a section numbered "Section 5.5(a)" would be part of "Section 5.5" and references to "Section 5.5" would also refer to material contained in the subsection described as "Section 5.5(a)"). 10.11. ASSIGNMENT. No party may assign either this Agreement or any of its rights, interests or obligations hereunder without the prior written approval of the other party. Subject to the preceding sentence, this Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns. 10.12. ALTERNATIVE STRUCTURE. Notwithstanding any provision of this Agreement to the contrary, Bancorp may at any time modify the structure of the acquisition of Chart set forth herein, subject to the prior written consent of Chart, which consent shall not be unreasonably withheld or delayed, provided that (i) the Merger Consideration to be paid to the holders of Chart Common Stock is not thereby changed in kind or reduced in amount as a result of such modification, (ii) Chart determines, based upon advice from its tax counsel, that such modification will not adversely affect the tax treatment of Chart's stockholders as a result of receiving the Merger Consideration and (iii) such modification will not materially delay or jeopardize receipt of any required approvals of Governmental Authorities. *REMAINDER OF PAGE HAS INTENTIONALLY BEEN LEFT BLANK* - 79 - IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed in counterparts by their duly authorized officers, all as of the day and year first above written. BENJAMIN FRANKLIN BANCORP, M.H.C. By: /s/ Thomas R. Venables ------------------------------------- Name: Thomas R. Venables Title: President and Chief Executive Officer By: /s/ Ronald E. Baron ------------------------------------- Name: Ronald E. Baron Title: Senior Vice President and Treasurer BENJAMIN FRANKLIN SAVINGS BANK By: /s/ Thomas R. Venables ------------------------------------- Name: Thomas R. Venables Title: President and Chief Executive Officer By: /s/ Ronald E. Baron ------------------------------------- Name: Ronald E. Baron Title: Senior Vice President and Treasurer CHART BANK, A COOPERATIVE BANK By: /s/ Richard E. Bolton, Jr. ------------------------------------- Name: Richard E. Bolton, Jr. Title: President and Chief Executive Officer By: /s/ Dean L. Kenney ------------------------------------- Name: Dean L. Kenney Title: Treasurer and Chief Financial Officer - 80 - A-1 EX-3.1 5 b52576bfexv3w1.txt EX-3.1 ARTICLES OF ORGANIZATION OF BENJAMIN FRANKLIN BANCORP, INC. EXHIBIT 3.1 ARTICLES OF ORGANIZATION OF BENJAMIN FRANKLIN BANCORP, INC. . . . TABLE OF CONTENTS ARTICLE I. NAME........................................................ 1 ARTICLE II. PURPOSE.................................................... 1 ARTICLE III. AUTHORIZED CAPITAL SHARES................................. 1 ARTICLE IV. CAPITAL SHARES............................................. 1 4.1. RIGHTS AND PREFERENCES; RECLASSIFICATION....................... 1 4.2. COMMON SHARES.................................................. 2 ARTICLE V. RESTRICTIONS ON TRANSFER.................................... 2 ARTICLE VI. OTHER LAWFUL PROVISIONS.................................... 2 6.1. CERTAIN BUSINESS COMBINATIONS.................................. 2 6.2. STANDARDS FOR BOARD OF DIRECTORS' ACTIONS...................... 10 6.3. SHAREHOLDER VOTE REQUIRED FOR CERTAIN TRANSACTIONS............. 10 6.4. PREEMPTIVE RIGHTS.............................................. 10 6.5. DIRECTORS...................................................... 11 6.6. CALL OF SPECIAL MEETINGS....................................... 12 6.7. QUORUM; VOTING................................................. 12 6.8. ACTION BY WRITTEN CONSENT...................................... 12 6.9. AMENDMENT OF BY-LAWS........................................... 13 6.10. AMENDMENT OF ARTICLES OF ORGANIZATION......................... 13 6.11. BENEFICIAL OWNERSHIP LIMITATION............................... 13 6.12. INTERPRETATION................................................ 15 6.13. CERTAIN STATUTE............................................... 16
- i - ARTICLES OF ORGANIZATION OF BENJAMIN FRANKLIN BANCORP, INC. ARTICLE I. NAME The exact name of the corporation is: Benjamin Franklin Bancorp, Inc. ARTICLE II. PURPOSE The purpose of the corporation is to engage in any lawful business. ARTICLE III. AUTHORIZED CAPITAL SHARES The total number of shares and par value of each class of shares that the Corporation is authorized to issue is as follows:
WITHOUT PAR VALUE WITH PAR VALUE - ---------------------------- --------------------------------- NUMBER OF NUMBER OF TYPE SHARES TYPE SHARES PAR VALUE - ------ ---------- ---- --------- --------- Common 75,000,000
ARTICLE IV. CAPITAL SHARES 4.1. RIGHTS AND PREFERENCES; RECLASSIFICATION. The Board of Directors (or, if permitted by law, any authorized committee thereof) is expressly authorized, without shareholder action and to the fullest extent permitted by law, to provide for the issuance of the shares of capital stock of the Corporation in one or more classes or series of such stock and to fix the designations, powers, including voting powers, full or limited, or no voting powers, preferences and the relative, participating, optional or other special rights of the shares of each class or series and any qualifications, limitations and restrictions thereof. The number of authorized shares of any class or series, the distinguishing designation thereof and the preferences, limitations and relative rights applicable thereto shall be set forth in these Articles or any amendment (an "AMENDMENT OF DESIGNATION") thereto approved by the shareholders or by the Board of Directors without shareholder action, provided that the Board of Directors may not approve an aggregate number of authorized shares of all classes and series which exceeds the total number of authorized shares approved by the shareholders and specified in these Articles of Organization, as amended from time to time (these "ARTICLES"). Any such action with respect to any class or series may be amended or rescinded by the shareholders or by the Board of Directors at any time prior to the initial issuance of shares of such class or series. At any time after the initial issuance of shares of any class or series the Board of Directors may reclassify any unissued shares of such class or series into one or more existing or new classes or series. Shares of any class or series may be issued as a share dividend in respect of shares of another class or series. If authorized by the Board of Directors, shares of a class or series having preference over another class or series with respect to distributions, including dividends and distributions upon the dissolution of the corporation, may be issued as a share dividend in respect of shares of such other class or series whether or not there are at the time any outstanding shares of any third class or series as to which the shares then to be issued have a right with respect to distribution which is prior, superior or substantially equal. 4.2. COMMON SHARES. The authorized shares of this Corporation have been designated as Common Shares, subject to the right of the Board of Directors to reclassify any unissued Common Shares into one or more existing or new classes or series. The holders of the Common Shares shall have the exclusive right to vote for the election of directors of the Corporation and on all other matters requiring shareholder action (with each outstanding share entitling the holder thereof to one vote on each matter properly submitted to the shareholders of the Corporation for their vote); provided, however, that, except as otherwise required by law, holders of Common Shares shall not be entitled to vote (in their capacity as holders of Common Shares) on any amendment to these Articles that alters or changes the preferences, limitations or relative rights of one or more other class or series of outstanding stock if the holders of such affected class or series are entitled to vote, either separately or together with the holders of one or more other such other class or series, on such amendment pursuant to these or pursuant to the Massachusetts Business Corporation Act (the "ACT"). The holders of the Common Shares shall be entitled to such dividends as may from time to time be declared by the Board of Directors out of any funds legally available for the declaration of dividends, subject to any applicable provisions of the Act, other applicable law or these Articles, and subject to the relative rights and preferences of any shares of any other class or series authorized and issued in accordance with these Articles. Subject to the relative rights and preferences of any other class or series authorized and issued hereunder, upon the dissolution or liquidation of the Corporation, whether voluntary or involuntary, the holders of Common Shares shall be entitled to receive pro rata all assets of the Corporation available for distribution to its shareholders. ARTICLE V. RESTRICTIONS ON TRANSFER The restrictions, if any, imposed by these Articles upon the transfer of shares of any class or series of shares are: None. ARTICLE VI. OTHER LAWFUL PROVISIONS 6.1. CERTAIN BUSINESS COMBINATIONS. 6.1.1 VOTE REQUIRED FOR CERTAIN BUSINESS COMBINATIONS. In addition to any affirmative vote required by the Act or these Articles, and except as otherwise expressly provided in Section 6.1.3 of these Articles, any Business Combination (as defined in - 2 - Section 6.1.2) shall require the affirmative vote of the holders of at least seventy-five percent (75%) of the voting power of all of the then-outstanding shares of capital shares of the Corporation entitled to vote generally in the election of directors (the "VOTING SHARES"), voting together as a single voting group (it being understood that for purposes of this Section 6.1, each of the Voting Shares shall have one vote or such other number of votes as may be granted to it pursuant to Article IV of these Articles). Such affirmative vote shall be required notwithstanding the fact that no vote may be required, or that a lesser percentage may be specified, by law or by any other provisions of these Articles (other than Section 6.1.3) or any Amendment of Designation (as defined in Section 4.1) or in any agreement with any national securities exchange or otherwise. 6.1.2 BUSINESS COMBINATION DEFINED. The term "BUSINESS COMBINATION" as used in this Article VI shall mean: (a) any merger or consolidation of the Corporation or any Subsidiary (as defined in Section 6.1.4(j)) with (a) any Interested Shareholder (as defined in Section 6.1.4(h)) or (b) any other corporation (whether or not itself an Interested Shareholder) which is, or after such merger or consolidation would be, an Interested Shareholder or an Affiliate (as defined in Section 6.1.4(a)) of an Interested Shareholder; or (b) any sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of transactions) to or with any Interested Shareholder or any Affiliate of any Interested Shareholder of any assets of the Corporation or any Subsidiary having an aggregate Fair Market Value (as defined in Section 6.1.4(f)) equal to or greater than ten percent (10%) of the combined assets of the Corporation and its Subsidiaries; or (c) the issuance or transfer by the Corporation or any Subsidiary (in one transaction or a series of transactions) of any securities of the Corporation or any Subsidiary to any Interested Shareholder or any Affiliate of any Interested Shareholder in exchange for cash, securities or other property (or a combination thereof) having an aggregate Fair Market Value equal to or greater than ten percent (10%) of the combined assets of the Corporation and its Subsidiaries, except for any issuance or transfer pursuant to an employee benefit plan of the Corporation or any Subsidiary thereof (established with the approval of a majority of the Independent Directors (as defined in Section 6.1.4(e)); or (d) the adoption of any plan or proposal for the liquidation or dissolution of the Corporation proposed by or on behalf of any Interested Shareholder or any Affiliate of any Interested Shareholder; or (e) any reclassification of securities (including any reverse share split) or recapitalization of the Corporation or any merger or consolidation of the Corporation with any of its Subsidiaries or any other transaction (whether or not with or into or otherwise involving any Interested Shareholder) which has the effect, directly or indirectly, of increasing the proportionate share of the outstanding shares of any class or - 3 - series of equity or convertible securities of the Corporation or any Subsidiary which is directly or indirectly owned by any Interested Shareholder or any Affiliate of any Interested Shareholder. 6.1.3 WHEN HIGHER VOTE IS NOT REQUIRED. The provisions of Section 6.1.1 shall not be applicable to any particular Business Combination, and such Business Combination shall require only such affirmative vote, if any, as may be required by law or by any other provision of these Articles, if either (x) the condition specified in Section 6.1.3(a) is met or (y) all of the conditions specified in Section 6.1.3(b) are met: (a) APPROVAL BY INDEPENDENT DIRECTORS. The Business Combination shall have been approved by two-thirds (2/3) of the Independent Directors then in office, it being understood that this condition shall not be capable of satisfaction unless there is at least one Independent Director. (b) PRICE AND PROCEDURE REQUIREMENTS. All of the following conditions shall have been met: (1) The aggregate amount of the cash and the Fair Market Value of consideration other than cash, determined as of the date of the consummation of the Business Combination, to be received per share by holders of Common Shares in such Business Combination shall be at least equal to the higher of the following: (A) (if applicable) the highest per share price (including any brokerage commissions, transfer taxes and soliciting dealers' fees) paid by the Interested Shareholder or any of its Affiliates for any Common Shares acquired by it (1) within the two-year period immediately prior to the first public announcement of the proposal of the Business Combination (the "ANNOUNCEMENT DATE," determined in accordance with Section 6.1.4(b)) or (2) in the transaction in which it became an Interested Shareholder, whichever is higher; (B) the Fair Market Value per share of Common Shares of the Corporation on the Announcement Date or on the date on which the Interested Shareholder became an Interested Shareholder (the "DETERMINATION DATE"), whichever is higher. (2) The aggregate amount of the cash and the Fair Market Value of consideration other than cash, determined as of the date of the consummation of the Business Combination, to be received per share by holders of shares of any class of outstanding Voting Shares other than the Common Shares shall be at least equal to the highest of the following (it being intended that the requirements of this Section 6.1.3(b)(2) shall be required to be met with respect to each such other class of outstanding Voting Shares, whether or not the Interested Shareholder has previously acquired any shares of a particular class of Voting Shares): (A) (if applicable) the highest per share price (including - 4 - any brokerage commissions, transfer taxes and soliciting dealers' fees) paid by the Interested Shareholder or any of its Affiliates for any shares of such class of Voting Shares acquired by it (1) within the two-year period immediately prior to the Announcement Date or (2) in the transaction in which it became an Interested Shareholder, whichever is higher; or (B) (if applicable) the highest preferential amount per share to which the holders of shares of such class of Voting Shares are entitled in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation; or (C) the Fair Market Value per share of such class of Voting Shares on the Announcement Date or on the Determination Date, whichever is higher. (3) The holders of all outstanding Voting Shares not beneficially owned by the Interested Shareholder immediately prior to the consummation of any Business Combination shall be entitled to receive in such Business Combination cash or other consideration for their shares meeting all of the terms and conditions of this Section 6.1.3(b); provided, however, that the failure of any shareholders who are exercising their statutory rights to dissent from such Business Combination and receive payment of the fair value of their shares to exchange their shares in such Business Combination shall not be deemed to have prevented the condition set forth in this Section 6.1.3(b)(3) from being satisfied. (4) The consideration to be received by holders of any particular class or, if outstanding, any particular series of outstanding Voting Shares (including Common Shares) shall be in cash or in the same form as the Interested Shareholder or any of its Affiliates has previously paid for shares of such class or series of Voting Shares. If the Interested Shareholder or any of its Affiliates has paid for shares of any class or any series of Voting Shares with varying forms of consideration, the form of consideration to be received per share by holders of such class or series of Voting Shares shall be either cash or the form used to acquire the largest number of shares of such class or series of Voting Shares previously acquired by the Interested Shareholder or any of its Affiliates. (5) The prices determined in accordance with Section 6.1.3(b) shall be subject to appropriate adjustment in the event of any share dividend, shares split, combination of shares or similar event. (6) After such Interested Shareholder has become an Interested Shareholder and prior to the consummation of any such Business Combination: (a) except as shall have been approved by two-thirds (2/3) of the Independent Directors, there shall have been no failure to declare and pay at the regular date therefor any full quarterly dividends (whether or not cumulative) on any outstanding shares having preference over the Common Shares as to dividends or liquidation; (b) there shall have been (1) no reduction in the annual rate of - 5 - dividends paid on the Common Shares (except as necessary to reflect any subdivision of the Common Shares), except as approved by two-thirds (2/3) of the Independent Directors, and (2) an increase in such annual rate of dividends as necessary to reflect any reclassification (including any reverse shares split), recapitalization, reorganization or any similar transaction which has the effect of reducing the number of outstanding shares of the Common Shares, unless the failure so to increase such annual rate is approved by two-thirds (2/3) of the Independent Directors; and (c) neither such Interested Shareholder nor any of its Affiliates shall have become the beneficial owner (as such term is defined in Section 6.1.4(c)) of any additional Voting Shares except as part of the transaction which results in such Interested Shareholder becoming an Interested Shareholder. (7) After such Interested Shareholder has become an Interested Shareholder, such Interested Shareholder shall not have received the benefit, directly or indirectly (except proportionately as a shareholder), of any loans, advances, guarantees, pledges or other financial assistance or any tax credits or other tax advantages provided, directly or indirectly, by the Corporation, whether in anticipation of or in connection with such Business Combination or otherwise. (8) A proxy or information statement describing the proposed Business Combination and complying with the requirements of the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), and the rules and regulations thereunder (or any subsequent provisions replacing such Act, rules or regulations) shall be mailed to shareholders of the Corporation at least 30 days prior to the consummation of such Business Combination (whether or not such proxy or information statement is required to be mailed pursuant to such Act or subsequent provisions). Such proxy or information statement shall contain, if a majority of the Independent Directors so requests, an opinion of a reputable investment banking firm which shall be selected by a majority of the Independent Directors, furnished with all information such investment banking firm reasonably requests and paid a reasonable fee for its services by the Corporation upon the Corporation's receipt of such opinion, as to the fairness (or lack of fairness) of the terms of the proposed Business Combination from the point of view of the holders of Voting Shares (other than the Interested Shareholder). 6.1.4 CERTAIN DEFINITIONS. For the purpose of these Articles: (a) "AFFILIATE" or "ASSOCIATE" shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Exchange Act as in effect on the date of filing of these Articles. (b) ANNOUNCEMENT DATE. For the purposes of determining the "ANNOUNCEMENT DATE," in the event that the first public announcement of the proposal of the Business Combination is made after the close on such date of any securities exchange registered under the Exchange Act on which any shares of the Voting Shares of the Corporation are traded, or of any automated quotation system maintained by the Nasdaq Stock Market, Inc. or any other system on which any shares of the Voting Shares - 6 - of the Corporation are listed, then the Announcement Date shall be deemed to be the next day on which such exchange or quotation system is open. (c) "BENEFICIAL OWNERSHIP" shall be determined pursuant to Rule 13d-3 of the General Rules and Regulations under the Exchange Act (or any successor rule or statutory provision), or, if said Rule 13d-3 shall be rescinded and there shall be no successor rule or statutory provision thereto, pursuant to said Rule 13d-3 as in effect on the date of filing of these Articles; provided, however, that a person shall, in any event, also be deemed to be a "BENEFICIAL OWNER" of any Voting Shares: (1) which such person or any of its Affiliates or Associates (as herein defined) beneficially owns, directly or indirectly, within the meaning of Rule 13d-3 of the Exchange Act, as in effect on the date of filing of these Articles; or (2) which such person or any of its Affiliates or Associates has (a) the right to acquire (whether such right is exercisable immediately or only after the passage of time), pursuant to any agreement, arrangement or understanding (but shall not be deemed to be the beneficial owner of any voting shares solely by reason of an agreement, contract, or other arrangement with this Corporation to effect any transaction which is described in Section 6.1.2) or upon the exercise of conversion rights, exchange rights, warrants, or options, or otherwise, (b) sole or shared voting or investment power with respect thereto pursuant to any agreement, arrangement, understanding, relationship or otherwise (but shall not be deemed to be the beneficial owner of any voting shares solely by reason of a revocable proxy granted for a particular meeting of shareholders, pursuant to a public solicitation of proxies for such meeting, with respect to shares of which neither such person nor any such Affiliate is otherwise deemed the beneficial owner), or (c) the right to dispose of or transfer; or (3) which are beneficially owned, directly or indirectly, by any other person with which such first-mentioned person or any of its Affiliates or Associates has any agreements, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of any shares of capital shares of the Corporation; and provided further, however, that (1) no Director or Officer of this Corporation (and no Affiliate of any such Director or Officer) shall, solely by reason of any or all of such Director's or Officer's acting in his or her capacities as such, be deemed, for any purposes hereof, to beneficially own any Voting Shares beneficially owned by another such Director or Officer (or any Affiliate thereof), and (2) neither any employee shares ownership plan or similar plan of the Corporation or any Subsidiary, nor any trustee with respect thereto or any Affiliate of such trustee (solely by reason of its capacity as such trustee), shall be deemed, for any purposes hereof, to beneficially own any Voting Shares held under any such plan. For purposes of computing the percentage beneficial ownership of Voting Shares of a - 7 - person, the outstanding Voting Shares shall include shares deemed owned by such person through application of Section 6.1.4(c), but shall not include any other Voting Shares which may be issuable by this Corporation pursuant to any agreement, arrangement or understanding, or upon exercise of conversion rights, warrants or options, or otherwise. (d) CONSIDERATION OTHER THAN CASH. In the event of any Business Combination in which the Corporation survives, the phrase "CONSIDERATION OTHER THAN CASH" as used in Section 6.1.3(b)(1) and Section 6.1.3(b)(2) hereof shall include the Common Shares and/or the shares of any other class of outstanding Voting Shares retained by the holders of such shares. (e) "INDEPENDENT DIRECTOR" means (1) at any time when there is no Interested Shareholder, any member of the Board of Directors, and (2) at any time when there is an Interested Shareholder, any member of the Board of Directors who (i) is not, and was not at any time during the two-year period immediately prior to the date in question, an Affiliate or Associate of the Interested Shareholder, and (ii) is not an employee of the Corporation or any Affiliate of the Corporation. (f) "FAIR MARKET VALUE" means: (1) in the case of shares, the highest closing sales price of the shares during the 30-day period immediately preceding the date in question of such a share on the National Association of Securities Dealers Automated Quotation System or any system then in use, or, if such shares are admitted to trading on a principal United States securities exchange registered under the Exchange Act, Fair Market Value shall be the highest sale price reported during the 30-day period preceding the date in question, or, if no such quotations are available, the Fair Market Value on the date in question of such a share as determined by the Board of Directors in good faith; and (2) in the case of property other than cash or shares, the fair market value of such property on the date in question as determined in good faith by a majority of the Independent Directors. All references to prices and values, including references to "FAIR MARKET VALUE" and "HIGHEST PER SHARE PRICE" shall in each case be adjusted to the extent necessary to reflect an appropriate adjustment for any dividend or distribution in such shares or any share split or reclassification of outstanding shares into a greater number of shares or any combination or reclassification of outstanding shares into a smaller number of shares. (g) "GROUP ACTING IN CONCERT" shall mean persons seeking to combine or pool their voting or other interests in the securities of the Corporation for a common purpose, pursuant to any contract, understanding, relationship, agreement or other arrangement, whether written, oral or otherwise, or persons acting with conscious parallel - 8 - behavior, or any "GROUP OF PERSONS" as defined under Section 13(d) of the Exchange Act. When persons act together for such purpose, their group is deemed to have acquired their shares. (h) "INTERESTED SHAREHOLDER" shall mean any person (other than the Corporation, any Subsidiary or any employee shares ownership plan formed by the Corporation) who or which: (1) is the beneficial owner, directly or indirectly, of ten percent (10%) or more of the voting power of the outstanding Voting Shares; or (2) is an Affiliate of the Corporation and at any time within the two-year period immediately prior to the date in question was the beneficial owner, directly or indirectly, of ten percent (10%) or more of the voting power of the then outstanding Voting Shares; or (3) is an assignee of or has otherwise succeeded to any Voting Shares which were at any time within the two-year period immediately prior to the date in question beneficially owned by any Interested Shareholder, if such assignment or succession shall have occurred in the course of a transaction or series of transactions not involving a public offering within the meaning of the Securities Act of 1933, as amended, and such assignment or succession was not approved by two-thirds (2/3) of the Independent Directors. (i) A "PERSON" shall include any individual, group acting in concert, corporation, partnership, limited liability company, limited liability partnership, association, joint venture, partnership, pool, joint shares company, trust, unincorporated organization or similar company, syndicate, or any group formed for the purpose of acquiring, holding or disposing of securities. (j) "SUBSIDIARY" means any corporation of which at least a majority of any class of equity security is owned, directly or indirectly, by the Corporation; provided, however, that for the purposes of the exclusion from the definition of Interested Shareholder set forth in Section 6.1.4(h), the term "Subsidiary" shall mean only a corporation of which a majority of each class of equity security is owned, directly or indirectly, by the Corporation. 6.1.5 POWERS OF THE BOARD OF DIRECTORS. A majority of the Independent Directors of the Corporation then in office shall have the power and duty to determine for the purposes of this Section 6.1, on the basis of information known to them after reasonable inquiry, (A) whether a person is an Interested Shareholder, (B) the number or percentage of Voting Shares beneficially owned by any person, (C) whether a person is an Affiliate or Associate of another, (D) whether the assets which are the subject of any Business Combination have, or the consideration to be received for the issuance or transfer of securities by the Corporation or any Subsidiary in any Business Combination has, an aggregate Fair Market Value equal to or greater than ten percent (10%) of the combined assets of the Corporation and its Subsidiaries, (E) whether the requirements of Section 6.1.3 have been met with respect to any Business - 9 - Combination, and (F) any other matters of interpretation arising under this Section 6.1. The good faith determination of a majority of the Independent Directors on such matters shall be conclusive and binding for all purposes of this Section 6.1. 6.1.6 NO EFFECT ON FIDUCIARY OBLIGATIONS OF INTERESTED SHAREHOLDERS. Nothing contained in this Section 6.1 shall be construed to relieve any Interested Shareholder from any fiduciary obligation imposed by law. 6.1.7 AMENDMENT, REPEAL, ETC. Notwithstanding any other provisions of these Articles or the By-Laws of the Corporation (and notwithstanding the fact that a lesser percentage or no vote may be specified by law, these Articles or the By-Laws of the Corporation), and in addition to any affirmative vote of the holders of or any other class or series of capital shares of the Corporation or any series of the foregoing then outstanding which is required by law or by or pursuant to these Articles, the affirmative vote of the holders of seventy-five percent (75%) or more of the outstanding Voting Shares, voting together as a single voting group, shall be required to amend, repeal, or adopt any provisions inconsistent with, this Section 6.1. 6.2. STANDARDS FOR BOARD OF DIRECTORS' ACTIONS. Members of the Board of Directors of the Corporation, in considering what they reasonably believe to be in the best interests of the Corporation, may consider the interests of the Corporation's employees, suppliers, creditors and customers, the economy of the state, the region and the nation, community and societal considerations, and the long-term and short-term interests of the Corporation and its shareholders, including the possibility that these interests may be best served by the continued independence of the Corporation. 6.3. SHAREHOLDER VOTE REQUIRED FOR CERTAIN TRANSACTIONS. Subject to the provisions of Section 6.1, any (i) sale, lease or exchange of all or substantially all of the property or assets, including goodwill, of the Corporation, or (ii) merger, share exchange or consolidation of the Corporation with or into any other entity, shall, to the extent approval by the Corporation's shareholders is required by applicable law or by these Articles, require the affirmative vote of at least two-thirds of the total number of votes eligible to be cast by shareholders on such sale, lease or exchange, or merger, share exchange or consolidation, voting together as a single voting group, at a duly constituted meeting of shareholders called expressly for such purpose. The two-thirds vote requirement set forth in the previous sentence shall not apply, and only the affirmative vote of a majority of the total number of votes eligible to be cast by shareholders on such matter, voting together as a single voting group, shall be required if the Board of Directors recommends, by the affirmative vote of two-thirds (2/3) of the Directors then in office at a duly constituted meeting of the Board of Directors (unless at the time of such action there shall be an Interested Shareholder, in which case such action shall also require the affirmative vote of a majority of the Independent Directors then in office at such meeting), that the shareholders approve such transaction by the affirmative vote of a majority of the total votes eligible to be cast by shareholders on such transaction, voting together as a single voting group. The provisions of this Section 6.3 shall not apply to the extent that a higher percentage vote shall be required by law or the provisions of Section 6.1 of these Articles. 6.4. PREEMPTIVE RIGHTS. Holders of the capital shares of the Corporation shall not be entitled to preemptive rights with respect to any capital shares of the Corporation which may be - 10 - issued. 6.5. DIRECTORS. 6.5.1 CLASSIFICATION OF DIRECTORS. The number of Directors and their respective classifications shall be fixed from time to time by the Board of Directors; provided, however, that if at the time of such action there is an Interested Shareholder, such action shall in addition require the affirmative vote of a majority of the Independent Directors then in office. The Directors, other than those who may be elected by the holders of any other class or series of shares of the Corporation with a separate right to elect Directors, shall be classified, with respect to the term for which they severally hold office, into three classes, as nearly equal in number as possible, with one class to be elected annually. The initial Directors of the Corporation shall hold office as follows: the first class of Directors shall hold office initially for a term expiring at the first Annual Meeting of shareholders following the Conversion Effective Date (as defined below), the second class of Directors shall hold office initially for a term expiring at the second Annual Meeting of shareholders following the Conversion Effective Date, and the third class of Directors shall hold office initially for a term expiring at the third Annual Meeting of shareholders following the Conversion Effective Date. At each succeeding Annual Meeting of shareholders, the successors of the class of Directors whose term expires at that meeting shall be elected by a plurality vote of all votes cast at such meeting to hold office for a term expiring at the Annual Meeting of shareholders held in the third year following the year of their election. Members of each class shall hold office until the Annual Meeting occurring at the end of their respective terms, or until such Director sooner dies, resigns, is removed or becomes disqualified. Despite the expiration of a Director's term, such Director shall continue to serve until his or her successor is duly elected and qualified or until the number of Directors has been reduced. A decrease in the number of Directors shall not shorten any incumbent Director's term. For the purpose of this Section 6.5, the "CONVERSION EFFECTIVE DATE" shall mean the effective date of this Corporation's conversion from mutual holding company to stock form in accordance with the provisions of Chapter 167H of the Massachusetts General Laws. Notwithstanding the foregoing, whenever, pursuant to the provisions of Article IV of these Articles, any voting group shall have the right to elect Directors at an annual or special meeting of stockholders, the election, term of office, filling of vacancies and other features of such directorships shall be governed by the terms of these Articles and any Amendment of Designations applicable thereto. 6.5.2 REMOVAL OF DIRECTORS. Subject to the rights of any voting group with a separate right to elect Directors, any Director (including persons elected by Directors to fill vacancies in the Board of Directors) may be removed from office, only for cause and only by an affirmative vote of not less than two-thirds (2/3) of the total votes eligible to be cast by shareholders, voting together as a single class, at a duly constituted meeting of shareholders called expressly for the purpose of removing such Director, and the meeting notice must state that the purpose, or one of the purposes, of the meeting is removal of the Director. 6.5.3 VACANCIES. Any vacancy in the Board of Directors, including a vacancy resulting from the enlargement of the Board, may be filled only by the affirmative vote of the majority of the remaining Directors then in office, though less than a quorum of the number constituting the full board as fixed by the Board of Directors; provided, however, that if at the time of such vacancy there is an Interested Shareholder, such vacancy may be filled only by the - 11 - affirmative vote of a majority of the Independent Directors then in office. A Director elected to fill such a vacancy shall be elected to serve for the remainder of the full term of the class of Directors in which the vacancy occurred or the new directorship was created and until such Director's successor has been duly elected and qualified, or until such Director sooner dies, resigns, is removed or becomes disqualified. If the vacant office was held by a Director elected by a voting group of shareholders, only the shareholders of that voting group or Directors elected by that voting group are entitled to fill the vacancy. 6.5.4 LIMITATION OF LIABILITY OF DIRECTORS. To the maximum extent permitted by the Act, as the same exists or may hereafter be amended, no Director of the Corporation shall be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a Director notwithstanding any provision of law imposing such liability. No amendment to or repeal of the provisions of this paragraph shall apply to or have any effect on the liability or alleged liability of any director of the Corporation for or with respect to any act or failure to act of such director occurring prior to such amendment or repeal. If the Act is hereafter amended to further eliminate or limit the personal liability of Directors or to authorize corporate action to further eliminate or limit such liability, then the liability of the Directors of this Corporation shall be eliminated or limited to the fullest extent permitted by the Act as so amended. 6.6. CALL OF SPECIAL MEETINGS. Special meetings of shareholders may be called by a majority of the Directors then in office (provided, however, that if there is an Interested Shareholder, any such call by the Board of Directors shall also require the affirmative vote of a majority of the Independent Directors then in office). Special meetings shall be called by the Secretary or in case of the death, absence, incapacity or refusal of the Secretary, by any other officer, upon written application of one or more stockholders who hold at least (i) 80% in interest of the capital stock entitled to vote at such meeting or (ii) such lesser percentage, if any, (but not less than 40%) as shall be determined to be the maximum percentage which the Corporation is permitted by applicable law to establish for the call of such a meeting. The hour, date and place of any special meeting and the record date for determining the shareholders having the right to notice of and to vote at such meeting shall be determined by the Board of Directors or the President. At a special meeting of shareholders, only such business shall be conducted, and only such proposals shall be acted upon, as shall have been properly brought before the meeting in accordance with the procedures set forth in the By-Laws of the Corporation. 6.7. QUORUM; VOTING. Except as otherwise provided by law or expressly provided in Section 6.11, the presence, in person or by proxy, of the holders of record of capital shares of the Corporation entitling the holders thereof to cast a majority of the total number of votes entitled to be cast on a matter by a voting group shall constitute a quorum of that voting group for action on that matter at a meeting of the shareholders. Every reference in these Articles to a majority or other proportion of capital shares (or the holders thereof) for purposes of determining any quorum requirement or any requirement for shareholder consent or approval shall be deemed to refer to such majority or other proportion of the votes (or the holders thereof) then entitled to be cast in respect of such capital shares after giving effect to the provisions of Section 6.11. 6.8. ACTION BY WRITTEN CONSENT. Any action to be taken at any Annual Meeting or special meeting of shareholders may be taken without a meeting if all shareholders entitled to - 12 - vote on the matter consent to the action in writing and the written consents are filed with the records of the meetings of shareholders within 60 days of the earliest dated consent delivered to the Corporation as required by this Section 6.8. Such consents shall be treated for all purposes as a vote at a meeting. 6.9. AMENDMENT OF BY-LAWS. 6.9.1 AMENDMENT BY DIRECTORS. Except as otherwise required by law, the Board of Directors may adopt, amend or repeal the By-Laws of this Corporation in whole or in part, acting by the affirmative vote of a majority of the Directors then in office at a duly constituted meeting of the Board of Directors (unless at the time of such action there shall be an Interested Shareholder, in which case such action shall also require the affirmative vote of two-thirds (2/3) of the Independent Directors then in office at such meeting). Not later than the time of giving notice of the annual meeting of shareholders next following the adoption, amendment or repeal by the Directors of any By-Law, notice thereof stating the substance of such action shall be given to all shareholders entitled to vote on amending the By-Laws. 6.9.2 AMENDMENT BY SHAREHOLDERS. The By-Laws of the Corporation may be amended at a duly constituted meeting of shareholders, called expressly for such purpose, by the affirmative vote of at least seventy-five percent (75%) of the total votes eligible to be cast by shareholders on such amendment, voting together as a single voting group; provided, however, that if the Board of Directors recommends, by the affirmative vote of two-thirds (2/3) of the Independent Directors then in office at a duly constituted meeting of the Board of Directors, that shareholders approve such amendment at such meeting of shareholders, such amendment shall only require the affirmative vote of a majority of the total votes eligible to be cast by shareholders on such amendment, voting together as a single voting group. 6.10. AMENDMENT OF ARTICLES OF ORGANIZATION. These Articles may be amended by the Board of Directors without shareholder action to the fullest extent permitted by the Act. Except as otherwise expressly required by law with respect to the right of any voting group to vote separately on an amendment to these Articles, these Articles may also be amended, at a duly constituted meeting of shareholders called expressly for such purpose, by the affirmative vote of at least seventy-five percent (75%) of the total votes eligible to be cast by shareholders on such amendment, voting together as a single voting group; provided, however, that if the Board of Directors recommends, by the affirmative vote of at least two-thirds (2/3) of the Independent Directors then in office at a duly constituted meeting of the Board of Directors, that shareholders approve such amendment at such meeting of shareholders, such amendment shall only require the affirmative vote of a majority of the total votes eligible to be cast by shareholders on such amendment, voting together as a single voting group. Notwithstanding the foregoing, to the extent that any provision of these Articles provides for shareholder approval by a vote of more than a majority of the total votes eligible to be cast, such provision may only be amended, altered, changed or repealed after approval by the same percentage vote as is provided for in such provision. 6.11. BENEFICIAL OWNERSHIP LIMITATION. 6.11.1 For a period of five (5) years from the Conversion Effective Date, no - 13 - person shall directly or indirectly offer to acquire or acquire the beneficial ownership of more than ten percent (10%) of the issued and outstanding Voting Shares (including any securities convertible into, or exercisable for, Voting Shares) if, after conversion or exercise by such person of all such convertible or exercisable securities of which such person is the beneficial owner, such person would be the beneficial owner of more than ten percent (10%) of the then-outstanding Voting Shares (the "10% LIMIT"). 6.11.2 This limitation shall not apply to (i) the Corporation, any Subsidiary or any pension, profit-sharing, stock bonus or other compensation plan maintained by the Corporation or by a member of a controlled group of corporations or trades or businesses of which the Corporation is a member for the benefit of the employees of the Corporation or any Subsidiary, or any trust or custodial arrangement established in connection with any such plan; (ii) any offer with a view toward public resale made exclusively to the Corporation by underwriters or a selling group acting on its behalf, (iii) to a corporate reorganization which does not result in any change in the respective beneficial ownership interests of the Corporation's shareholders other than pursuant to the exercise of any dissenters' appraisal rights, or (iv) to any offer or acquisition of Voting Shares which has been expressly approved in advance by an affirmative vote of not less than two-thirds (2/3) of the Directors then in office (unless at the time of such action there shall be an Interested Shareholder, in which case such action shall also require the affirmative vote of two-thirds (2/3) of the Independent Directors then in office at such meeting). 6.11.3 Notwithstanding any other provision of these Articles, in no event shall any record owner of any outstanding Voting Shares which is beneficially owned, directly or indirectly, by a person who, as of any record date for the determination of shareholders entitled to vote on any matter, beneficially owns in excess of the 10% Limit in contravention of the provisions of this Section 6.11, be entitled to any vote or be permitted to vote in respect of the shares held in excess of the 10% Limit. The number of votes which may be cast by any record owner by virtue of the provisions hereof in respect of Voting Shares beneficially owned by such person beneficially owning shares in excess of the 10% Limit shall be a number equal to the total number of votes which a single record owner of all Voting Shares beneficially owned by such person would be entitled to cast (as determined in accordance with this Section 6.11) multiplied by a fraction, the numerator of which is the number of shares of such class or series which are both beneficially owned by such person and owned of record by such record owner and the denominator of which is the total number of shares of Voting Shares beneficially owned by such person. In the event that shares are acquired in violation of this Section 6.11, the Corporation is authorized to refuse to recognize a transfer or attempted transfer of any shares of Voting Shares to any person who is the beneficial owner, or as the result of such transfer would become the beneficial owner, of shares in excess of the 10% Limit, and (ii) the Board of Directors may cause such shares in excess of the 10% Limit to be transferred to an independent trustee for sale on the open market or otherwise, with the expenses of such trustee to be paid out of the proceeds of the sale. 6.11.4 The following definitions shall apply to this Section 6.11: (a) "ACQUIRE" shall include every type of acquisition, whether effected by purchase, exchange, operation of law, or otherwise. - 14 - (b) "AFFILIATE" shall have the meaning ascribed to it in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended, as in effect on the date of filing of these Articles. (c) The "10% LIMIT" shall have the meaning set forth in Section 6.11.1. (d) A "PERSON" shall include an individual, a firm, a group acting in concert, a corporation, a partnership, an association, a joint venture, a pool, a joint stock company, a trust, an unincorporated organization or similar company, a syndicate or any other group formed for the purpose of acquiring, holding or disposing of securities or any other entity. 6.11.5 The Board of Directors shall have the power to construe and apply the provisions of this Section 6.11 and to make all determinations necessary or desirable to implement such provisions, including but not limited to matters with respect to: (i) the number of Voting Shares beneficially owned by any person; (ii) whether a person is an Affiliate of another; (iii) whether a person has an agreement, arrangement, or understanding with another as to the matters referred to in the definition of beneficial ownership; (iv) the application of any other definition or operative provision of this Section 6.11 to the given facts; or (v) any other matter relating to the applicability or effect of this Section 6.11. 6.11.6 The Board of Directors shall have the right to demand that any person who is reasonably believed to beneficially own Voting Shares in excess of the 10% Limit (or holds of record Voting Shares beneficially owned by any person in excess of the 10% Limit) supply the Corporation with complete information as to: (i) the record owner(s) of all shares beneficially owned by such person who is reasonably believed to own shares in excess of the 10% Limit; and (ii) any other factual matter relating to the applicability or effect of this Section 6.11 as may reasonably be requested of such person. 6.11.7 Any constructions, applications, or determinations made by the Board of Directors pursuant to this Section 6.11 in good faith and on the basis of such information and assistance as was then reasonably available for such purpose shall be conclusive and binding upon the Corporation and its shareholders. 6.11.8 In the event any provision (or portion thereof) of this Section 6.11 shall be found to be invalid, prohibited or unenforceable for any reason, the remaining provisions (or portions thereof) of this Section 6.11 shall remain in full force and effect, and shall be construed as if such invalid, prohibited or unenforceable provision had been stricken herefrom or otherwise rendered inapplicable, it being the intent of this Corporation and its shareholders that each such remaining provision (or portion thereof) of this Section 6.11 remain, to the fullest extent permitted by law, applicable and enforceable as to all shareholders, including shareholders owning an amount of Voting Shares in excess of the 10% Limit, notwithstanding any such finding. 6.12. INTERPRETATION. When a reference is made in these Articles to a Section, such reference shall include subsections, which are part of the related Section (e.g., a section numbered "Section 5.5.1" would be part of "Section 5.5" and references to "Section 5.5" would - 15 - also refer to material contained in the subsection described as "Section 5.5.1"). The headings contained in these Articles are for reference purposes only and shall not affect in any way the meaning or interpretation of these Articles. 6.13. CERTAIN STATUTE. The provisions of Chapter 110D of the Massachusetts General Laws shall not apply to the Corporation. - 16 - ARTICLE VII Unless otherwise provided in the articles of organization, the effective date of organization of the corporation is the date and time the articles were received for filing if the articles are not rejected within the time prescribed by law. If a later effective date is desired, specify such date, which may not be later than the 90th day after the articles are received for filing: N/A. - 17 - ARTICLE VIII The information contained in this article is not a permanent part of the articles of organization. a. The street address of the initial registered office of the corporation in the commonwealth: b. The name of its initial registered agent at its registered office: c The names and addresses of the individuals who will serve as the initial directors, president, treasurer and secretary of the corporation: President: Treasurer: Secretary: Director(s): d. The fiscal year end of the corporation: e. A brief description of the business in which the corporation will engage: f. The street address of the principal office of the corporation is: g. The records of the corporation required to be kept in the commonwealth will be kept at: ___________________________________________________________________, which is the street address of its principal office; or an office of its transfer agent, its secretary/assistant secretary, or its registered agent. Signed this__________day of___________________________ _____________by the incorporators whose name and address are listed below: Name: Signature:_________________________________________ Address:___________________________________________ - 18 - THE COMMONWEALTH OF MASSACHUSETTS ARTICLES OF ORGANIZATION (GENERAL LAWS, CHAPTER 156D) I hereby certify that upon examination of these Articles of Organization, duly submitted to me, it appears that the provisions of the General Laws relative to the organization of corporations have been complied with, and I hereby approve said articles; and the filing fee in the amount of $______having been paid, said articles are deemed to have been filed with me this ______ day of ___________, 2005 at __________ am/pm. Effective date:_________________________________________ (must be within 90 days of date submitted) WILLIAM FRANCIS GALVIN Secretary of the Commonwealth Filing fee: $275.00 for up to 275,000 shares plus $100 for each additional 100,000 shares or any fraction thereof. TO BE FILLED IN BY CORPORATION CONTACT INFORMATION: _____________________________________________________ _____________________________________________________ _____________________________________________________ TELEPHONE: EMAIL: A copy of this filing will be available on-line at WWW.STATE.MA.US/SEC/COR after 7:00 p.m. on the date the document is filed. - 19 - EX-3.2 6 b52576bfexv3w2.txt EX-3.2 BYLAWS OF BENJAMIN FRANKLIN BANCORP, INC. EXHIBIT 3.2 BY-LAWS OF BENJAMIN FRANKLIN BANCORP, INC. Adopted _____________ TABLE OF CONTENTS
PAGE ARTICLE 1. ARTICLES OF ORGANIZATION............................................. 1 1.1. NAME AND POWERS......................................................... 1 1.2. INTERESTED SHAREHOLDER AND INDEPENDENT DIRECTORS........................ 1 ARTICLE 2. SHAREHOLDERS......................................................... 1 2.1. ANNUAL MEETING.......................................................... 1 2.2. SPECIAL MEETINGS........................................................ 1 2.3. PLACE OF MEETINGS....................................................... 1 2.4. MATTERS TO BE CONSIDERED AT ANNUAL MEETINGS............................. 2 2.5. RECORD DATE FOR PURPOSE OF MEETINGS..................................... 3 2.6. NOTICE OF MEETINGS...................................................... 3 2.7. SHAREHOLDERS LIST FOR MEETING........................................... 4 2.8. QUORUM.................................................................. 4 2.9. VOTING AND PROXIES...................................................... 4 2.10. ACTION AT MEETING...................................................... 5 2.11. ELECTRONIC ACTION...................................................... 5 2.12. ACTION WITHOUT MEETING................................................. 5 2.13. PRESIDING OFFICER...................................................... 6 2.14. VOTING PROCEDURES AND INSPECTORS OF ELECTIONS.......................... 6 2.15. RESCHEDULING OF MEETINGS; ADJOURNMENTS................................. 6 ARTICLE 3. DIRECTORS............................................................ 6 3.1. POWERS.................................................................. 6 3.2. ELECTION AND CHANGE IN SIZE OF BOARD.................................... 7 3.3. DIRECTOR NOMINATIONS.................................................... 7 3.4. QUALIFICATIONS.......................................................... 8 3.5. COMPENSATION............................................................ 8 3.6. MEETINGS................................................................ 8 3.7. NOTICE OF SPECIAL MEETINGS.............................................. 9 3.8. QUORUM.................................................................. 9 3.9. ACTION AT MEETING....................................................... 9 3.10. ACTION BY CONSENT...................................................... 9 3.11. PRESUMPTION OF ASSENT.................................................. 10 3.12. COMMITTEES............................................................. 10 3.13. POWERS OF EXECUTIVE COMMITTEE.......................................... 10 ARTICLE 4. OFFICERS............................................................. 10 4.1. ENUMERATION............................................................. 10 4.2. APPOINTMENT............................................................. 11 4.3. VACANCIES............................................................... 11 4.4. QUALIFICATION........................................................... 11 4.5. TENURE.................................................................. 11
- i - 4.6. CHAIRMAN AND VICE CHAIRMAN OF THE BOARD................................. 11 4.7. CHIEF EXECUTIVE OFFICER................................................. 11 4.8. PRESIDENT AND VICE PRESIDENT............................................ 12 4.9. TREASURER AND ASSISTANT TREASURERS...................................... 12 4.10. SECRETARY AND ASSISTANT SECRETARY; CLERK AND ASSISTANT CLERK........... 12 4.11. OTHER POWERS AND DUTIES................................................ 12 ARTICLE 5. RESIGNATIONS AND REMOVALS............................................ 12 5.1. RESIGNATION............................................................. 12 5.2. REMOVAL OF DIRECTOR..................................................... 13 5.3. REMOVAL OF OFFICER...................................................... 13 5.4. NO RIGHT TO COMPENSATION................................................ 13 ARTICLE 6. SHARES............................................................... 13 6.1. AMOUNT AUTHORIZED....................................................... 13 6.2. SHARE CERTIFICATES; STATEMENTS FOR UNCERTIFICATED SHARES................ 13 6.3. TRANSFERS............................................................... 14 6.4. RECORD DATE FOR PURPOSES OTHER THAN MEETINGS............................ 14 6.5. REPLACEMENT OF CERTIFICATES............................................. 14 6.6. DIVIDENDS............................................................... 14 ARTICLE 7. INDEMNIFICATION...................................................... 14 7.1. INDEMNIFICATION......................................................... 14 7.2. ADVANCEMENT OF EXPENSES................................................. 16 7.3. RIGHT OF INDEMNITEE TO BRING SUIT....................................... 17 7.4. DEFINITIONS............................................................. 17 7.5. OTHER INDEMNIFICATION RIGHTS............................................ 18 7.6. SURVIVAL OF BENEFITS.................................................... 19 7.7. SUBSEQUENT AMENDMENT.................................................... 19 7.8. MERGER OR CONSOLIDATION................................................. 19 7.9. SUBSEQUENT LEGISLATION.................................................. 19 7.10. SAVINGS CLAUSE......................................................... 19 7.11. INSURANCE.............................................................. 19 ARTICLE 8. MISCELLANEOUS PROVISIONS............................................. 20 8.1. FISCAL YEAR............................................................. 20 8.2. SEAL.................................................................... 20 8.3. REGISTERED AGENT AND REGISTERED OFFICE.................................. 20 8.4. EXECUTION OF INSTRUMENTS................................................ 20 8.5. VOTING OF SECURITIES.................................................... 20 8.6. CORPORATE RECORDS TO BE MAINTAINED...................................... 20 8.7. BY-LAW AMENDMENTS....................................................... 20 8.8. DIRECTOR CONFLICT OF INTEREST........................................... 20 8.9. ARTICLES OF ORGANIZATION................................................ 21
- ii - BY-LAWS OF BENJAMIN FRANKLIN BANCORP, INC. ARTICLE 1. ARTICLES OF ORGANIZATION 1.1. NAME AND POWERS. The name of the Corporation shall be as set forth in the Articles of Organization (as from time to time in effect, the "ARTICLES"). The Corporation shall have the purpose of engaging in any lawful business, unless a more limited purpose is set forth in the Articles. The powers of the Corporation shall be all powers as set forth in the Massachusetts Business Corporation Act (the "ACT"), unless more limited powers or restrictions on any powers are set forth in the Articles. The powers of the Corporation's Directors and shareholders, or any class of shareholders if the Corporation has more than one class of shares, and all matters concerning the conduct and regulation of the business and affairs of the Corporation shall be subject to such provisions in regard thereto, if any, as are set forth in the Articles. 1.2. INTERESTED SHAREHOLDER AND INDEPENDENT DIRECTORS. As used in these By-Laws, the terms "INTERESTED SHAREHOLDER" and "INDEPENDENT DIRECTOR" shall have the same respective meanings assigned to them in the Corporation's Articles. Any determination of beneficial ownership of securities under these By-Laws shall be made in the manner specified in the Articles. ARTICLE 2. SHAREHOLDERS 2.1. ANNUAL MEETING. The Annual Meeting of shareholders shall be held at such hour and date as may be fixed by the Board of Directors, which time and date may subsequently be changed at any time by vote of the Board of Directors. The Annual Meeting shall be held for the purpose of electing Directors and such other purposes as are specified in the notice of the meeting, and only business within such purposes may be conducted at the Annual Meeting. 2.2. SPECIAL MEETINGS. A special meeting of shareholders, including a special meeting held in lieu of the Annual Meeting, may be called at any time only by the President or by the Directors. Special meetings of shareholders also may be called in the manner set forth in the Articles. Each call of a meeting shall state the place, date, hour and purposes of the meeting. Only business within the purpose or purposes described in the notice of the special meeting may be conducted at the special meeting. 2.3. PLACE OF MEETINGS. The place at which any special or Annual Meeting of shareholders shall be held shall be fixed by the Board of Directors. Meetings of shareholders may be held at any physical location in or outside Massachusetts. In addition, the Board of Directors may authorize that any shareholder or proxy not physically present at a meeting may participate in the meeting by means of remote communication and, if so authorized, such shareholder shall be deemed present in person and entitled to vote. In the event that any shareholder or proxy is permitted to participate in a meeting by means of remote electronic communication: (a) the Corporation shall implement reasonable measures to verify that each person present and permitted to vote at a meeting by means of remote communication is a shareholder or proxyholder; (b) the Corporation shall implement reasonable measures to provide such shareholders and proxyholders a reasonable opportunity to participate in the meeting (including an opportunity to read or hear the proceedings of the meeting substantially concurrently with such proceedings) and to vote on matters submitted to the shareholders; and (c) if a shareholder or proxyholder votes or takes other action by means of remote communication at the meeting, a record of the vote or other action shall be maintained by the Corporation. 2.4. MATTERS TO BE CONSIDERED AT ANNUAL MEETINGS. At an Annual Meeting of shareholders, only such new business shall be conducted, and only such proposals shall be acted upon as shall be proper subjects for shareholder action pursuant to the Articles, these By-Laws, or applicable law and shall have been brought before the Annual Meeting (a) by, or at the direction of, the Board of Directors, the Chairman of the Board, or the President or (b) by any holder of record (both as of the time notice of such proposal is given by the shareholder as set forth below and as of the record date for the Annual Meeting in question) of any shares of capital stock of the Corporation entitled to vote at such Annual Meeting who complies with the requirements set forth in this Section 2.4. For a proposal to be properly brought before an Annual Meeting by a shareholder, the shareholder must have given timely notice thereof in writing to the Secretary of the Corporation. To be timely, a shareholder's notice must be received at the principal executive offices of the Corporation not less than 120 calendar days nor more than 150 days in advance of the first anniversary of the date of the Corporation's proxy statement for the previous year's Annual Meeting, provided, however, that (i) if no Annual Meeting was held in the previous year or the date of the Annual Meeting has been changed by more than 30 calendar days from the date of the previous year's Annual Meeting and (ii) in connection with the first Annual Meeting following the Conversion Effective Date (as defined in the Articles), then to be timely, notice by the shareholder must be received at the principal executive offices of the Corporation not later than the close of business on the tenth calendar day following the day on which notice of the date of the scheduled Annual Meeting is publicly disclosed. A shareholder's notice to the Secretary shall set forth as to each matter the shareholder proposes to bring before the Annual Meeting (a) a brief description of the proposal desired to be brought before the Annual Meeting and the reasons for conducting such business at the Annual Meeting, (b) the name and address, as they appear on the Corporation's books, of the shareholder proposing such business and any other shareholders known by such shareholder to be supporting such proposal, (c) the class and number of shares of the Corporation's capital stock which are beneficially owned by the shareholder on the date of such shareholder notice and by any other shareholders known by such shareholder to be supporting such proposal on the date of such shareholder notice, and (d) any financial interest of the shareholder in such proposal. The Board of Directors, a designated committee thereof or the presiding officer at the Annual Meeting may reject any shareholder proposal not made in accordance with the terms of this Section 2.4. If there is an Interested Shareholder, any determinations to be made by the Board of Directors or a designated committee thereof pursuant to the provisions of this Section 2.4 shall also require the approval of a majority of the Independent Directors then in office. - 2 - This provision shall not prevent the consideration and approval or disapproval at the Annual Meeting of reports of officers, Directors, and committees, but in connection with such reports, no matter shall be acted upon at such Annual Meeting unless stated and filed as herein provided. Notwithstanding the provisions of this Section 2.4, a shareholder shall also comply with all applicable requirements of the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT") and the rules and regulations thereunder with respect to the matters set forth in this Section 2.4. Nothing contained in this Section 2.4 shall require proxy materials distributed by the management of the Corporation to include any information with respect to shareholder proposals. 2.5. RECORD DATE FOR PURPOSE OF MEETINGS. The Directors may fix in advance a time not more than 70 days before the date of any meeting of shareholders as the record date for determining the shareholders having the right to notice of and to vote at such meeting and any adjournment thereof. In such case only shareholders of record on such date shall have such right, notwithstanding any transfer of shares on the Corporation's current record of shareholders after the record date. If no record date is fixed, the record date for determining shareholders having the right to notice of or to vote at a meeting of shareholders shall be at the close of business on the day before the day on which notice is given. If any meeting is adjourned to a date more than 120 days after the date fixed for the original meeting, the Directors shall fix a new record date. 2.6. NOTICE OF MEETINGS. Written notice of the place, day and hour of all meetings of shareholders shall be given by the Secretary, the Assistant Secretary or an officer designated by the Directors, at least seven days but no more than 60 days before the meeting, to each shareholder entitled to vote thereat and to each shareholder who, under the Act, the Articles or these By-Laws, is entitled to such notice. Notice of an adjourned meeting shall be given only if a new record date is fixed, in which case notice shall be given to all shareholders as of the new record date. The notice of a meeting shall state the purposes of the meeting. At any Annual Meeting of shareholders, only business and proposals properly brought before such meeting in the manner set forth in Section 2.4 may be conducted or acted upon. At any special meeting of shareholders, only business with the purpose or purposes described in the meeting notice may be conducted or acted upon. Notice may be given by leaving such notice with the shareholder or at such shareholder's residence or usual place of business, by mailing it, postage prepaid, and addressed to such shareholder at such shareholder's address as it appears in the Corporation's current record of shareholders, by facsimile telecommunication directed to a number furnished by the shareholder for the purpose, by electronic mail to the electronic mail address of the shareholder furnished by the shareholder for such purpose, or by any other electronic transmission (defined as any process of communication that does not directly involve the physical transfer of paper and that is suitable for the retention, retrieval and reproduction of information by the recipient) or other method permitted under the Act. The Corporation shall be entitled to rely on the address of a shareholder last notified to the Corporation. In case of the death, absence, incapacity or refusal of the Secretary, the Assistant Secretary or the officer designated by the Directors, such notice may be given by any other officer or by a person designated either by the Secretary or by the person or persons calling the meeting or by the - 3 - Board of Directors. Whenever notice of a meeting is required to be given to a shareholder under any provision of the Act, the Articles or these By-Laws, no such notice need be given to a shareholder, if a written waiver of notice, signed before or after the meeting by such shareholder, thereunto authorized, is delivered for inclusion with the records of the meeting. For purposes of these By-Laws, any document to be signed by a shareholder may be signed by his attorney in fact. 2.7. SHAREHOLDERS LIST FOR MEETING. After fixing a record date for a meeting of shareholders, the Secretary shall prepare an alphabetical list of all shareholders who are entitled to notice of the meeting. The shareholders list shall be available for inspection by any shareholder: (d) before the meeting, during the period beginning two days after notice of the meeting is given and upon written demand of the requesting shareholder, at the Corporation's principal office, a place identified in the meeting notice in the city where the meeting will be held, or, on a reasonably accessible electronic network; and (e) at the meeting. During such period before the meeting, a shareholder or his agent or attorney may inspect the list upon written demand and, to the extent entitled to do so under the Act, copy the list during regular business hours. A shareholder or his agent or attorney may also inspect the list at the meeting to the extent entitled to do so under the Act. 2.8. QUORUM. Subject to the Articles, at any meeting of the shareholders, a majority in interest of all the shares issued, outstanding and entitled to vote upon a matter to be considered at such meeting shall constitute a quorum for the consideration of such question, except that, if two or more voting groups are entitled to vote upon such matter as separate voting groups, then, in the case of each such voting group, a quorum shall consist of a majority of the votes entitled to be cast by the voting group for action on that matter. Notwithstanding the foregoing, shareholders (by a majority of the votes properly cast upon the question, whether or not a quorum is present) or the presiding officer may adjourn any meeting from time to time, and the meeting may be held as adjourned without further notice. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally noticed. A share once represented for any purpose at a meeting is deemed present for quorum purposes for the remainder of the meeting and for any adjournment thereof, unless (f) the shareholder attends solely to object to lack of notice, defective notice, or the conduct of the meeting on other grounds, and does not vote the shares or otherwise consent that they are to be deemed present; or (g) in the case of an adjournment, a new record date is or shall be set for that adjourned meeting. 2.9. VOTING AND PROXIES. Unless otherwise provided by the Articles, each shareholder shall have one vote for each share held by such shareholder of record on the record date and entitled to vote on the matter or matters to be considered at any meeting of the shareholders according to the records of the Corporation. Shareholders may vote either in person or by proxy appointed by written appointment form signed by the shareholder. An appointment form shall be valid for the period stated therein, or, if no period is stated, for a period of 11 months from the date the shareholder signed the form, or (if undated) the date of its receipt by the Secretary or other agent of the Corporation authorized to tabulate votes. An appointment of a proxy shall be effective with respect to the Corporation when received by the Secretary or other officer or agent authorized to tabulate votes at the meeting. Except as otherwise limited therein, appointment forms appointing proxies for a particular meeting shall entitle the persons named therein to vote - 4 - at any adjournment of such meeting but shall not be valid after final adjournment of such meeting. An appointment form with respect to shares held in the name of two or more persons shall be valid if signed by one of them unless at or prior to exercise of the appointment the Corporation receives a specific written notice to the contrary from any one of them. In the event an attempt is made to cast conflicting votes, in person or by exercise of an appointment form, by the several persons in whose names the shares stand, the vote or votes to which those persons are entitled shall be cast as directed by a majority of those holding such shares and present in person or by proxy at such meeting, but no votes shall be cast for such shares if a majority does not agree. An appointment form purporting to be signed by or on behalf of a shareholder shall be deemed valid unless successfully challenged at or prior to its exercise, and the burden of proving invalidity shall rest on the challenger. 2.10. ACTION AT MEETING. Subject to the Articles, when a quorum of a voting group is present for the consideration of a matter at any meeting of the shareholders, favorable action on a matter, other than the election of Directors, is taken by the shareholders or a voting group if the votes cast within the group favoring the action exceed the votes cast opposing the action, except where a larger vote is required by the Act, the Articles or these By-Laws. Any election of Directors shall be determined by a plurality of the votes cast by shareholders present in person or by proxy at the meeting and entitled to vote in the election. No ballot shall be required for such election unless requested by a shareholder present in person or by proxy at the meeting and entitled to vote in the election. Shares of the Corporation are not entitled to vote if they are owned, directly or indirectly, by another entity of which the Corporation owns, directly or indirectly, a majority of the voting interests. The Corporation may, however, vote any shares, including its own shares, held by it, directly or indirectly, in a fiduciary capacity, and no provision of these By-Laws shall be construed to limit the voting rights and powers relating to shares held pursuant to a plan which is intended to be an "employee stock ownership plan" as defined in the Internal Revenue Code, as now or hereafter in effect. 2.11. ELECTRONIC ACTION. Any vote, consent, waiver, proxy appointment or other action by a shareholder or by the proxy or other agent of any shareholder shall be considered given in writing, dated and signed if it consists of an electronic transmission that sets forth or is delivered with information from which the Corporation can determine: (h) the date the transmission was sent; and (i) that the sender of the transmission was the relevant shareholder, proxy, or agent, or a person authorized to act on any of their behalf. The date on which the electronic transmission was sent shall be considered the date on which it was signed. The electronic transmission shall be considered received by the Corporation if it has been sent to any address specified by the Corporation for the purpose or, if no address has been specified, to the principal office of the Corporation, addressed to the Secretary or other officer or agent having custody of the records of proceedings of shareholders. 2.12. ACTION WITHOUT MEETING. Any action to be taken at any Annual Meeting or special meeting of shareholders may be taken without a meeting if all shareholders entitled to vote on the matter consent to the action in writing and the written consents are filed with the records of the meetings of shareholders within 60 days of the earliest dated consent delivered to the Corporation as required by this Section 2.12. Such consents shall be treated for all purposes as a vote at a meeting. - 5 - 2.13. PRESIDING OFFICER. The Chief Executive Officer, or in his or her absence, the Chairman of the Board, shall preside at all annual or special meetings of shareholders and shall have the power, among other things, to adjourn such meeting at any time and from time to time, subject to Sections 2.6 and 2.8. The order of business and all other matters of procedure at every meeting of the shareholders shall be determined by the presiding officer or, in his or her absence, the Board of Directors. 2.14. VOTING PROCEDURES AND INSPECTORS OF ELECTIONS. In advance of any meeting of shareholders, the presiding officer may appoint one or more inspectors to act at an Annual Meeting or special meeting of shareholders and make a written report thereon. Any inspector may, but need not, be an officer, employee or agent of the Corporation. The inspector(s) shall (i) ascertain the number of shares outstanding and the voting power of each, (ii) determine the shares represented at a meeting and the validity of appointment forms and ballots, (iii) tabulate all votes and ballots, (iv) determine and retain for a reasonable period a record of the disposition of any challenges made to any determination by the inspectors, and (v) certify their determination of the number of shares represented at the meeting, and their count of all votes and ballots. The inspector(s) may appoint or retain other persons or entities to assist the inspector(s) in the performance of the duties of the inspector(s). The presiding officer may review all determinations made by the inspector(s), and in so doing the presiding officer shall be entitled to exercise his or her sole judgment and discretion and such officer shall not be bound by any determinations made by the inspector(s). All determinations by the inspector(s) and, if applicable, the presiding officer shall be valid unless a court of competent jurisdiction determines otherwise. 2.15. RESCHEDULING OF MEETINGS; ADJOURNMENTS. The Board of Directors or a designated committee thereof may postpone and reschedule any previously scheduled Annual Meeting or special meeting of shareholders, and a record date with respect thereto, regardless of whether any notice or public disclosure with respect to any such meeting or record date has been sent or made (unless there is an Interested Shareholder, in which case the affirmative vote of a majority of the Independent Directors shall also be required). Except as required under the Act, the Articles or these By-Laws the public announcement of an adjournment, postponement or rescheduling of any previously scheduled Annual Meeting of shareholders shall not commence a new time period for the giving of a shareholder's notice under Section 2.4 or Section 3.3 of these By-Laws or require the Board of Directors to set a new record date. Any adjourned session of any meeting of the shareholders shall be held at the place designated in the vote of adjournment, or if no such place is designated, at the same place or by the same remote communication method as the adjourned meeting. ARTICLE 3. DIRECTORS 3.1. POWERS. All corporate power shall be exercised by or under the authority of, and the business and affairs of the Corporation shall be managed under the direction of, the Board of Directors, subject to any limitation set forth in the Articles or in one or more shareholders' agreements. In particular, and without limiting the generality of the foregoing, the Directors may from time to time issue all or any part of the unissued shares of the Corporation authorized under the Articles, determine the number of authorized shares in any class or series, the distinguishing - 6 - designation thereof, and the preferences, limitations and relative rights applicable thereto, provided that the Board of Directors may not approve an aggregate number of authorized shares of all classes and series which exceeds the total number of authorized shares specified in the Articles and approved by the shareholders. The Directors may determine the consideration for which shares are to be issued and the manner of allocating such consideration between capital and surplus, and, before the Corporation issues shares, shall determine that the consideration received or to be received is adequate. In the event of any vacancy in the Board of Directors, the remaining Directors may exercise the powers of the full Board until the vacancy is filled. 3.2. ELECTION AND CHANGE IN SIZE OF BOARD. The initial members of the Board of Directors shall be those persons who were serving as Directors of Benjamin Franklin Bancorp, M.H.C. on the effective date of this Corporation's conversion from mutual to stock form in accordance with the provisions of Chapter 167H (the "CONVERSION EFFECTIVE DATE"). The number of Directors and their respective classifications shall be fixed from time to time in the manner prescribed in the Articles. 3.3. DIRECTOR NOMINATIONS. Nominations of candidates for election as Directors at any Annual Meeting of shareholders may be made (a) by, or at the direction of, a majority of the Board of Directors or a designated committee thereof (unless there is an Interested Shareholder, in which case the affirmative vote of a majority of the Independent Directors shall also be required) or (b) by any holder of record (both as of the time notice of such nomination is given by the shareholder as set forth below and as of the record date for the Annual Meeting in question) of any capital shares of the Corporation entitled to vote at such Annual Meeting who complies with the requirements set forth in this Section 3.3. Only persons nominated in accordance with the procedures set forth in this Section 3.3 shall be eligible for election as Directors at an Annual Meeting. Nominations, other than those made by, or at the direction of, the Board of Directors (or by the Independent Directors, if required), shall be made pursuant to timely notice in writing to the Secretary of the Corporation as set forth in this Section 3.3. To be timely, a shareholder's notice shall be delivered to, or mailed and received at, the principal executive offices of the Corporation not less than 120 calendar days nor more than 150 days in advance of the first anniversary of the date of the Corporation's proxy statement for the previous year's Annual Meeting, provided, however, that (i) if no Annual Meeting was held in the previous year or the date of the Annual Meeting has been changed by more than 30 calendar days from the date of the previous year's Annual Meeting and (ii) in connection with the first Annual Meeting following the Conversion Effective Date, then to be timely, notice by the shareholder must be received at the principal executive offices of the Corporation not later than the close of business on the tenth calendar day following the day on which notice of the date of the scheduled Annual Meeting is publicly disclosed. Such shareholder's notice shall set forth (a) as to each person whom the shareholder proposes to nominate for election or re-election as a Director and as to the shareholder giving the notice (i) the name, age, business address and residence address of such person, (ii) the principal occupation or employment of such person, (iii) the class and number of the Corporation's capital shares which are beneficially owned by such person on the date of such shareholder notice, and (iv) any other information relating to such person that is required to be disclosed in solicitations of proxies with respect to nominees for election as Directors, pursuant to the Exchange Act and the Rules and regulations thereunder, including, but not limited to, the - 7 - written consent of such person to serve as a Director if elected; and (b) as to the shareholder giving the notice (x) the name and address as they appear on the Corporation's books, of such shareholder and any other shareholders known by such shareholder to be supporting such nominees and (y) the class and number of the Corporation's capital shares which are beneficially owned by such shareholder on the date of such shareholder notice and by any other shareholders known by such shareholder to be supporting such nominees on the date of such shareholder notice. At the request of the Board of Directors, any person nominated by, or at the direction of, the Board of Directors for election as a Director at an Annual Meeting or special meeting shall furnish to the Secretary of the Corporation that information required to be set forth in the shareholder's notice of nomination which pertains to the nominee. Nothing contained in this Section 3.3 shall require proxy materials distributed by the management of the Corporation to include any information with respect to nominations by shareholders. No person shall be elected as a Director of the Corporation unless nominated in accordance with the procedures set forth in this Section 3.3. Ballots bearing the names of all the persons who have been nominated for election as Directors at an Annual Meeting or special meeting in accordance with the procedures set forth in this Section 3.3 shall be provided for use at such Annual Meeting or special meeting. The Board of Directors, a designated committee thereof, or the presiding officer may reject any nomination by a shareholder that is not timely made in accordance with this Section 3.3 or does not satisfy the requirements of this Section 3.3 in any material respect. If there is an Interested Shareholder, any determinations to be made by the Board of Directors or a designated committee thereof pursuant to the provisions of this paragraph shall also require the concurrence of a majority of the Independent Directors then in office. 3.4. QUALIFICATIONS. Each Director shall have such qualifications as are required by applicable law. No Director shall serve as a corporator, trustee, director or officer of any holding company or bank or thrift institution which is not a direct or indirect subsidiary of the Corporation. No person shall be qualified to be elected to serve as a Director if he or she has reached the age of 75 years. 3.5. COMPENSATION. The members of the Board of Directors and the members of any standing or special committee shall receive such compensation as the Board of Directors or the Executive Committee may determine. 3.6. MEETINGS. Regular meetings of the Directors may be held without call or notice at such places and at such times as the Directors may from time to time determine but in any event shall occur on at least a quarterly basis; provided, that any Director who is absent when such determination is made shall be given reasonable notice of the determination. Any or all of the Directors may participate in a meeting of the Directors or of a committee thereof by, or conduct the meeting through the use of, any means of communication by which all Directors participating may simultaneously hear each other during the meeting; and participation by such means shall constitute presence in person at any such meeting. - 8 - A regular meeting of the Directors may be held immediately following the Annual Meeting of shareholders, or special meeting in lieu thereof, at the same place as such shareholders' meeting. Special meetings of the Directors may be held at any time and place designated in a call of the meeting by the Chairman of the Board, if any, the President or two or more Directors. 3.7. NOTICE OF SPECIAL MEETINGS. Notice of all special meetings of the Directors shall be given to each Director by the Secretary, or Assistant Secretary, or by the officer or one of the Directors calling the meeting. Notice shall be given to each Director at least 24 hours in advance of the meeting. Notice may be given by leaving such notice with the Director at the residential or business address last notified to the Corporation, by mailing it, postage prepaid, and addressed to such Director at his address as last notified to the Corporation, by facsimile telecommunication directed to a number as last notified to the Corporation, by electronic mail to the electronic mail address of the Director as last notified to the Corporation, or by any other method permitted under the Act. When any Board of Directors' meeting, either regular or special, is adjourned for 30 days or more, notice of the adjourned meeting shall be given as in the case of the original meeting. It shall not be necessary to give any notice of the time and place of any meeting adjourned for less than 30 days or of the business to be transacted thereat, other than an announcement at the meeting at which such adjournment is taken. Notice need not be given to (i) any Director if, before or after the meeting, a written waiver of notice signed by him, or an electronic transmission by the Director to the Corporation waiving notice, is filed with the records of the meeting, or (ii) any Director who attends or participates in the meeting and either (A) does not, at the beginning of the meeting or promptly upon his arrival, object to holding the meeting or transacting business at the meeting or (B) votes for or assent to action taken at the meeting. A notice or waiver of notice of a Directors' meeting need not specify the purposes of the meeting. 3.8. QUORUM. At any meeting of the Directors, a quorum of the Board of Directors shall be the lesser of (i) one third of the number of Directors most recently fixed pursuant to the Articles or (ii) a majority of the Directors in office immediately before the meeting begins. Any meeting may be adjourned from time to time by a majority of the votes cast upon the question, whether or not a quorum is present. and, subject to Section 3.7, the meeting may be held as adjourned without further notice. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally noticed. 3.9. ACTION AT MEETING. If a quorum is present when a vote is taken, the affirmative vote of a majority of the Directors present is an act of the Board of Directors, unless the Articles or these By-Laws require the vote of a greater number of Directors. 3.10. ACTION BY CONSENT. Any action required or permitted to be taken at any meeting of the Directors may be taken without a meeting if all Directors then in office consent to the action in writing signed by each Director, or by electronic transmission delivered to the Corporation to the address specified by the Corporation for the purpose or, if no address is specified, to the principal office of the Corporation addressed to the Secretary; provided, that such written consents and/or electronic transmissions shall be included in the minutes or filed with the corporate records reflecting the action taken. Action taken by written consent is effective when - 9 - the last Director signs or delivers consent, unless the consent specifies a different effective date. Consents given in accordance with this provision shall be treated as a vote of the Directors for all purposes. 3.11. PRESUMPTION OF ASSENT. A Director who is present at a meeting of the Board of Directors or a committee of the Board of Directors when corporate action is taken is considered to have assented to the action taken unless: (1) he objects, at the beginning of the meeting or promptly upon his arrival, to holding it or transacting business at the meeting; (2) his dissent or abstention from the action taken is entered in the minutes of the meeting; or (3) he delivers written notice of his dissent or abstention to the presiding officer of the meeting before its adjournment or to the Corporation immediately after adjournment of the meeting. The right of dissent or abstention is not available to a Director who votes in favor of the action taken. 3.12. COMMITTEES. The Directors shall, by vote of a majority of all Directors then in office, create an Executive Committee and an Audit Committee and elect from their number the members of such committees, and may create such other committees as it deems appropriate, provided, however, that if the Corporation's Articles or these By-Laws provide that the number of Directors required to take Board action is greater than a majority of all Directors then in office, then the vote of such greater number shall be required to elect any committee. Except as the Directors may otherwise determine, any such committee may make rules for the conduct of its business, but unless otherwise provided by the Directors or in such rules, its business shall be conducted as nearly as may be in the same manner as is provided by these By-Laws for the Board of Directors. The Directors may delegate to any committee some or all of their powers except those which they are prohibited from delegating by any provision of law or by the Articles or these By-Laws. Without limitation of the foregoing, a committee may not (j) authorize distributions; (k) approve or propose to shareholders action that is required by law to be approved by shareholders; (l) change the number of the Board of Directors, remove Directors from office or fill vacancies on the Board of Directors; (m) amend Articles; (n) adopt, amend or repeal By-Laws; or (o) authorize or approve reacquisition of shares, except according to a formula or method prescribed by the Board of Directors. Any committee to which the Board of Directors delegates any of its powers or duties shall keep records of its meetings and shall report its action to the Board of Directors. The Board of Directors shall have power to rescind any action of any committee, but no such rescission shall have retroactive effect. 3.13. POWERS OF EXECUTIVE COMMITTEE. In addition to the powers and duties provided by law, the Executive Committee, when the Board of Directors is not in session, shall exercise general supervision and control in all matters pertaining to the interests of the Corporation not otherwise provided by law or in these By-Laws, subject at all times to the direction and control of the Board of Directors. ARTICLE 4. OFFICERS 4.1. ENUMERATION. The officers of the Corporation shall consist of a President, a Treasurer, a Secretary, and such other officers, if any, including a Chairman and a Vice Chairman of the Board of Directors, a Chief Executive Officer, one or more Vice Presidents, Assistant Treasurers and Assistant Secretaries, as the incorporators at their initial meeting or the - 10 - Directors from time to time may appoint. 4.2. APPOINTMENT. The Chairman of the Board, the Chief Executive Officer, the President, the Treasurer, the Secretary, and all officers at the level of Vice President or above shall be elected by the Board of Directors annually at their first meeting following the Annual Meeting of shareholders. Other officers, if any, may be appointed by the Board of Directors or the Chief Executive Officer at such meeting or at any other time. 4.3. VACANCIES. If any office at the level of Vice President or above becomes vacant by reason of death, resignation, removal, disqualification or otherwise, the Directors may appoint a successor or successors, who shall hold office for the unexpired term, except as otherwise provided by the Act, the Articles or these By-Laws. 4.4. QUALIFICATION. Any two or more offices may be held by the same person. The President shall be a Director. Any officer may be required by the Board of Directors to give bond for the faithful performance of his or her duties in such amount and with such sureties as the Board of Directors may determine. Other than as required by applicable law or regulation, no officer or Director need be a shareholder. No officer shall serve as a corporator, trustee, director or officer of any holding company or bank or thrift institution which is not a direct or indirect subsidiary of the Corporation. 4.5. TENURE. Except as otherwise provided by the Articles or by these By-Laws, the Chief Executive Officer, President, Treasurer and Secretary shall hold office until the first meeting of the Directors following the Annual Meeting of shareholders or the special meeting in lieu thereof, and thereafter until such officer's successor is duly appointed and qualified; and all other officers shall hold office until the first meeting of the Directors following the Annual Meeting of the shareholders or the special meeting in lieu thereof, unless a shorter term is specified in the vote choosing or appointing them, or in each case until such officer sooner dies, resigns, is removed or becomes disqualified. Election or appointment of an officer, employee or agent shall not of itself create contract rights to continued employment or otherwise. The Board of Directors may authorize the Corporation to enter into an employment contract with any officer in accordance with governing law or regulation, but no such contract right shall preclude the Board of Directors from exercising its right to remove any officer at any time in accordance with Section 5.3. 4.6. CHAIRMAN AND VICE CHAIRMAN OF THE BOARD. A Chairman or Vice Chairman of the Board of Directors shall have such powers as the Directors may from time to time designate. Unless the Board of Directors otherwise specifies, the Chairman of the Board, or in his or her absence the Vice Chairman, shall preside at all meetings of the Board of Directors. The Chairman and Vice Chairman must be Directors. 4.7. CHIEF EXECUTIVE OFFICER. The Chief Executive Officer shall, subject to the direction of the Board of Directors, have general supervision and control of the Corporation's business and shall have the authority to appoint any officers, employees or agents, other than those required by the Act, the Articles or these By-Laws to be appointed by the Board of Directors, and to prescribe their powers and duties which may include the power to appoint subordinate employees or agents. - 11 - 4.8. PRESIDENT AND VICE PRESIDENT. The President shall have such powers and shall perform such duties as the Board of Directors may from time to time designate and shall serve as the Chief Executive Officer of the Corporation unless the Board of Directors otherwise provides. Unless the Board of Directors otherwise specifies, in the absence of the Chairman and Vice Chairman, if any, of the Board of Directors, the President shall preside, when present, at all meetings of the Directors. Any Vice President shall have such powers as the Directors or Chief Executive Officer may from time to time designate. 4.9. TREASURER AND ASSISTANT TREASURERS. The Treasurer shall, subject to the direction of the Directors, be the chief financial and accounting officer of the Corporation, and shall have general charge of the financial concerns of the Corporation and the care and custody of the funds and valuable papers of the Corporation, and books of account and accounting records. The Treasurer shall have power to endorse for deposit or collection all notes, checks, drafts, and other obligations for the payment of money payable to the Corporation or its order, and to accept drafts on behalf of the Corporation. Any Assistant Treasurer shall have such powers as the Directors or Chief Executive Officer may from time to time designate. 4.10. SECRETARY AND ASSISTANT SECRETARY; CLERK AND ASSISTANT CLERK. Unless a transfer agent is appointed, the Secretary shall keep or cause to be kept the share and transfer records of the Corporation in which are contained the names of all shareholders and the record address and the amount of shares held by each. The Secretary shall record all proceedings of the shareholders in a paper record, or in another form capable of conversion into a paper record within a reasonable time. Such records shall be kept at the principal office of the Corporation or at the office of its transfer agent or of the Secretary and shall be open at all reasonable times to the inspection of any shareholder. The Secretary shall record all proceedings of the Directors in a paper record, or in another form capable of conversion into a paper record within a reasonable time. Any Assistant Secretary shall have such powers as the Directors or the Chief Executive may from time to time designate. In the absence of the Secretary from any meeting of the Directors, any Assistant Secretary, or a temporary secretary designated by the person presiding at such meeting, shall record such proceedings. 4.11. OTHER POWERS AND DUTIES. Each officer shall, subject to these By-Laws, have in addition to the duties and powers specifically set forth in these By-Laws, such duties and powers as are customarily incident to his office, and such duties and powers as the Directors or the Chief Executive Officer may from time to time designate. ARTICLE 5. RESIGNATIONS AND REMOVALS 5.1. RESIGNATION. Any Director or officer may resign at any time by delivering his resignation in writing to the Chairman of the Board, if any, the President, the Treasurer or the Secretary or to a meeting of the Directors. Such resignation shall be effective upon receipt - 12 - unless specified to be effective at some other time. 5.2. REMOVAL OF DIRECTOR. Subject to the rights of any voting group with a separate right to elect Directors, any Director (including persons elected by Directors to fill vacancies in the Board of Directors) may be removed from office, only for cause and only by an affirmative vote of not less than two-thirds (2/3) of the total votes eligible to be cast by shareholders, voting together as a single class, at a duly constituted meeting of shareholders called expressly for the purpose of removing such Director, and the meeting notice must state that the purpose, or one of the purposes, of the meeting is removal of the Director. 5.3. REMOVAL OF OFFICER. Any officer appointed by the Board of Directors may be removed at any time with or without cause by vote of a majority of the full Board of Directors; provided, however, that if at the time of such removal there is an Interested Shareholder, the affirmative vote of a majority of the Independent Directors then in office shall instead be required. Any officer appointed by the Chief Executive Officer, and any employee or agent of the Corporation, may be removed at any time with or without cause by the Chief Executive Officer, or by the Board of Directors. 5.4. NO RIGHT TO COMPENSATION. No Director or officer resigning and (except where a right to receive compensation shall be expressly provided in a duly authorized written agreement with the Corporation) no Director or officer removed, shall have any right to any compensation as such Director or officer for any period following such Director's or officer's resignation or removal, or any right to damages on account of such removal, whether such Director's or officer's compensation be by the month or by the year or otherwise, unless in the case of a resignation, the Directors, or in the case of a removal, the body acting on the removal, shall in their or its discretion provide for compensation. ARTICLE 6. SHARES 6.1. AMOUNT AUTHORIZED. The total number of authorized shares shall be as fixed in the Articles. 6.2. SHARE CERTIFICATES; STATEMENTS FOR UNCERTIFICATED SHARES. Shares of the Corporation may be certificated or uncertificated. Each shareholder shall be entitled to: (p) for certificated shares, a certificate of the shares of the Corporation setting forth the number of shares and the class and the designation of the series in such form as shall, in conformity with law, be prescribed from time to time by the Directors; and (q) for uncertificated shares, a written information statement setting forth the number of shares and the class and the designation of the series of the shares. Each certificate shall be signed by the President or a Vice President, and by the Treasurer or an Assistant Treasurer, either by manual or facsimile signatures, and shall bear the corporate seal or its facsimile. In case any officer who has signed or whose facsimile signature has been placed on such certificate shall have ceased to be such officer before such certificate is issued, it may be issued by the Corporation with the same effect as if he were such officer at the time of its issue. - 13 - Every certificate or information statement for shares which are subject to any restriction on transfer pursuant to the Articles, the By-Laws or any agreement to which the Corporation is a party shall have the restriction noted conspicuously on the front or back of the certificate or information statement. If the Corporation is authorized to issue different classes of shares or different series within a class then the variations in rights, preferences and limitations applicable to each class and series, and the authority of the Board of Directors to determine variations for any future class or series, must be summarized on the front or back of each certificate. Alternatively, each certificate may state conspicuously on its front or back that the Corporation will furnish the shareholder this information on request in writing and without charge. 6.3. TRANSFERS. Subject to the restrictions, if any, stated or noted on the share certificates or information statements, shares may be transferred on the books of the Corporation by: (r) for certificated shares, the surrender to the Corporation or its transfer agent of the certificate therefor properly endorsed or accompanied by a written assignment and power of attorney properly signed, with necessary transfer stamps affixed, and with such proof of the authenticity of signature as the Corporation or its transfer agent may reasonably require; and (s) for uncertificated shares, by delivery to the Corporation or its transfer agent an instruction with a request to register a transfer properly signed by the transferring shareholder, and with such proof of authenticity of signature as the Corporation or its transfer agent may reasonably require. Except as may be otherwise required by the Act, by the Articles or by these By-Laws, the Corporation shall be entitled to treat the record holder of shares as shown on its books as the owner of such shares for all purposes, including the payment of dividends and the right to receive notice and to vote with respect thereto, regardless of any transfer, pledge or other disposition of such shares, until the shares have been transferred on the books of the Corporation in accordance with the requirements of these By-Laws. 6.4. RECORD DATE FOR PURPOSES OTHER THAN MEETINGS. The Directors may fix in advance a time not more than 70 days preceding the date for the payment of any dividend or the making of any distribution to shareholders or the last day on which the consent or dissent of shareholders may be effectively expressed for any purpose, as the record date for determining the shareholders having the right to receive such dividend or distribution or the right to express such consent or dissent. In such case only shareholders of record on such date shall have such right, notwithstanding any transfer of shares on the books of the Corporation after the record date. If no record date is fixed, the record date for determining shareholders shall be at the close of business on the day on which the Board of Directors acts with respect thereto. 6.5. REPLACEMENT OF CERTIFICATES. In case of the alleged loss or destruction or the mutilation of a share certificate, a duplicate certificate may be issued in place thereof, upon such terms as the Directors may prescribe. 6.6. DIVIDENDS. Subject to applicable law, the Articles and these By-Laws, the Board of Directors may from time to time declare, and the Corporation may pay, dividends on its outstanding shares. - 14 - ARTICLE 7. INDEMNIFICATION 7.1. INDEMNIFICATION. Certain capitalized terms used but not defined elsewhere in this Article 7 are defined in Section 7.4. 7.1.1. DIRECTORS AND SENIOR OFFICERS. Except as provided in Section 7.1.3 or Section 7.1.4, each Director and Senior Officer of the Corporation (and his or her heirs, estate and personal representatives) shall be indemnified by the Corporation to the fullest extent permitted by applicable law, against any and all Liabilities that are incurred or suffered by him or her or on his or her behalf in connection with any threatened, pending or completed Proceeding (without regard to whether the basis of such Proceeding is alleged action in an official capacity as a Director or Senior Officer of the Corporation or in any other capacity for or on behalf of the Corporation while serving as a Director or Senior Officer) or any claim, issue or matter therein, which Proceeding such Director or Senior Officer is, or is threatened to be made, a party to or participant in by reason of such Director's or Senior Officer's Corporate Status. The rights of indemnification provided by this Section 7.1.1 shall continue as to a Director or Senior Officer after he or she has ceased to be a Director or Senior Officer and shall inure to the benefit of his or her heirs, estate, executors, administrators and personal representatives. Notwithstanding the foregoing, the Corporation shall indemnify any Director or Senior Officer seeking indemnification in connection with a Proceeding initiated by such Director or Senior Officer only if such Proceeding was authorized by the Board of Directors of the Corporation, unless such Proceeding was brought to enforce such Director's or Senior Officer's rights to indemnification or Advancement of Expenses under these By-Laws in accordance with the provisions set forth herein. 7.1.2. OTHER OFFICERS. Except as provided in Section 7.1.3 or Section 7.1.4, each Other Officer of the Corporation (and his or her heirs, estate and personal representatives) may, in the discretion of the Board of Directors, be indemnified by the Corporation to the fullest extent permitted by applicable law against any and all Liabilities that are incurred or suffered by him or her or on his or her behalf in connection with any threatened, pending or completed Proceeding (without regard to whether the basis of such Proceeding is alleged action in an official capacity as an Other Officer of the Corporation or in any other capacity for or on behalf of the Corporation while serving as an Other Officer) or any claim, issue or matter therein, which such Other Officer is, or is threatened to be made, a party to or participant in by reason of such Other Officer's Corporate Status. The rights of indemnification provided by this Section 7.1.2 shall continue as to an Other Officer after he or she has ceased to be an Other Officer and shall inure to the benefit of his or her heirs, estate, executors, administrators and personal representatives. Notwithstanding the foregoing, the Corporation may indemnify any Other Officer seeking indemnification in connection with a Proceeding initiated by such Other Officer only (i) if such Proceeding was authorized by the Board of Directors of the Corporation or (ii) if such Proceeding was brought to enforce such Other Officer's rights to indemnification or Advancement of Expenses under these By-Laws. 7.1.3. SERVICE AT DIRECTION OF BOARD OF DIRECTORS. No indemnification shall be provided to any person with respect to his or her serving or having served in any capacity "at the request or direction of the Corporation" unless such service was required or directed by vote of the Board of Directors before the occurrence of the event to which the indemnification relates; - 15 - provided that the Corporation may, in the discretion of the Board of Directors, indemnify a Director or Senior Officer or Other Officer, as to a specific Proceeding, even though such vote was not obtained. 7.1.4. LIMITATIONS IMPOSED BY STATE OR FEDERAL LAW. Notwithstanding any other provision set forth in this Article 7, in no event shall any payments made by the Corporation pursuant to this Article 7 exceed the amount permissible under applicable state or federal law, including without limitation Section 18(k) of the Federal Deposit Insurance Act and the regulations promulgated thereunder. 7.2. ADVANCEMENT OF EXPENSES. 7.2.1. ADVANCEMENT OF EXPENSES TO DIRECTORS AND SENIOR OFFICERS. The Corporation shall advance, to the fullest extent permitted by applicable law and from time to time before or after the final disposition of a Proceeding, Expenses incurred by or on behalf of any Director or Senior Officer in connection with any threatened, pending or completed Proceeding in which such Director or Senior Officer is involved by reason of his or her Corporate Status. The Corporation shall advance all such Expenses not later than twenty (20) days after the receipt by the Corporation of a written statement from such Director or Senior Officer requesting such advance or advances from time to time. Such statement or statements shall reasonably evidence the Expenses incurred by such Director or Senior Officer and shall be preceded or accompanied by an Undertaking. Notwithstanding the foregoing, the Corporation shall advance all Expenses incurred by or on behalf of any Director or Senior Officer seeking advancement of expenses hereunder in connection with a Proceeding initiated by such Director or Senior Officer only if such Proceeding was (i) authorized by the Board of Directors of the Corporation, or (ii) brought to enforce Director's or Senior Officer's rights to indemnification or Advancement of Expenses under these By-Laws. If a claim for advancement of Expenses hereunder by a Director or Senior Officer is not paid in full by the Corporation within twenty (20) days after receipt by the Corporation of documentation of Expenses and the required Undertaking, such Director or Senior Officer may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim and if successful in whole or in part, such Director or Senior Officer shall also be entitled to be paid the expenses of prosecuting such claim. The burden of proving that a Director or Senior Officer is not entitled to an Advancement of Expenses shall be on the Corporation. 7.2.2. ADVANCEMENT OF EXPENSES TO OTHER OFFICERS. The Corporation may, in the discretion of the Board of Directors, advance, to the fullest extent permitted by applicable law and from time to time before or after the final disposition of a Proceeding, Expenses incurred by or on behalf of any Other Officer in connection with any threatened, pending or completed Proceeding in which such Other Officer is involved by reason of his or her Corporate Status upon the receipt by the Corporation of a statement or statements from such Other Officer requesting such advance or advances from time to time. Such statement or statements shall reasonably evidence the Expenses incurred by such Other Officer and shall be preceded or accompanied by an Undertaking. 7.2.3. UNDERTAKING. Notwithstanding the foregoing, to the extent required by the Act, Expenses incurred by an Indemnitee in advance of the final disposition of a Proceeding may - 16 - be paid only upon the Corporation's receipt of an undertaking ("UNDERTAKING") by the Indemnitee made in compliance with the Act, including his or her written undertaking to repay such payment if he or she shall ultimately be determined not to be entitled to indemnification. The Corporation shall accept such Undertaking without reference to the financial ability of the Indemnitee to make such repayment, and no posting of a bond or other security by such Indemnitee shall be required. 7.3. RIGHT OF INDEMNITEE TO BRING SUIT. If a claim for indemnification under this Article 7 is not paid in full by the Corporation within sixty (60) days after a written claim has been received by the Corporation, the Indemnitee may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim. If the Indemnitee is successful in whole or in part in any such suit, the Indemnitee shall also be paid the expense of prosecuting or defending such suit. In any suit brought by the Indemnitee to enforce a right to indemnification hereunder it shall be a defense that the Indemnitee has not met the applicable standard of conduct set forth in the Act. The burden of proving that a Director or Senior Officer is not entitled to indemnification shall be on the Corporation. The failure of the Corporation (including its Board of Directors or any committee thereof, independent legal counsel, or shareholders) to make a determination concerning the permissibility of such indemnification under this Article 7 shall not be a defense to the action and shall not create a presumption that such indemnification is not permissible. 7.4. DEFINITIONS. For the purposes of this Article 7: "ADVANCEMENT OF EXPENSES" means any advancement of Expenses made pursuant to Section 7.2. "CORPORATE STATUS" describes the status of a person who is serving or has served (i) as a Director of the Corporation, (ii) as an Officer of the Corporation, or (iii) while he or she is or was serving as a Director or Officer, he or she also is or was serving, at the request or direction of the Corporation, as a director, partner, trustee, officer, employee or agent of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise. For purposes of this Article 7, an Officer or Director of the Corporation who is serving or has served as a director, partner, trustee, officer, employee or agent of a Subsidiary shall be deemed to be serving or have served at the request of the Corporation. Notwithstanding the foregoing, "CORPORATE STATUS" shall not include the status of a person who is serving or has served as a director, officer, employee or agent of a constituent corporation absorbed in a merger or consolidation transaction with the Corporation with respect to such person's activities before said transaction, unless specifically authorized by the Board of Directors or the stockholders of the Corporation; "DIRECTOR" means any person who serves or has served as a member of the Board of Directors of the Corporation; "EMPLOYEE" means any person who serves or has served as an employee or agent of the Corporation but who is not a Director or Officer of the Corporation; - 17 - "EXPENSE" means all reasonable attorneys' fees, retainers, court costs, transcript costs, fees of expert witnesses, private investigators and professional advisors (including, without limitation, accountants and investment bankers), travel expenses, duplicating costs, printing and binding costs, costs of preparation of demonstrative evidence and other courtroom presentation aids and devices, costs incurred in connection with document review, organization, imaging and computerization, telephone charges, postage, delivery service fees, and all other disbursements, costs or expenses of the type customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, being or preparing to be a witness in, settling or otherwise participating in, a Proceeding; "INDEMNITEE" means each person to whom indemnification or Advancement of Expenses is to be provided under this Article 7; "LIABILITIES" means all Expenses and any other liability or loss including judgments, fines, ERISA excise taxes, penalties, and amounts reasonably paid in settlement. "OFFICER" means any person who serves or has served as a Senior Officer or as an Other Officer of the Corporation; "OTHER OFFICER" means any person who serves or has served as an appointed or elected officer of the Corporation but who is not a Director or Senior Officer of the Corporation; "PROCEEDING" shall mean any threatened, pending or completed action, suit, arbitration, alternate dispute resolution mechanism, inquiry, investigation, administrative hearing or any other proceeding whether civil, criminal, administrative, arbitrative or investigative; "SENIOR OFFICER" means any person who serves or has served as an appointed or elected officer of the Corporation at the level of Vice President or above and shall include, without limitation, the President, Chief Executive Officer, Chief Operating Officer, Chief Financial Officer, General Counsel and any Executive Vice President; and "SUBSIDIARY" shall mean any corporation, partnership, limited liability company, joint venture, trust or other entity of which the Corporation owns (either directly or through or together with another Subsidiary of the Corporation) either (i) a general partner, managing member or other similar interest or (ii) (A) 50% or more of the voting power of the voting capital equity interests of such corporation, partnership, limited liability company, joint venture or other entity, or (B) 50% or more of the outstanding voting capital stock or other voting equity interests of such corporation, partnership, limited liability company, joint venture or other entity. "UNDERTAKING" shall have the meaning set forth in Section 7.2.3. 7.5. OTHER INDEMNIFICATION RIGHTS. The provisions of this Article 7 shall not be construed to be exclusive. The Corporation shall have the power to indemnify (and to provide for the Advancement of Expenses to) any of its Employees who are not Directors or Officers and to enter into specific agreements, commitments or arrangements for indemnification with any person (including Directors, Officers and Employees) on any terms not prohibited by law which it deems to be appropriate. Nothing in this Article 7 shall limit any lawful rights to indemnification existing independently of this Article 7 or shall be deemed to limit the Corporation's authority to indemnify any person pursuant to any contract or otherwise. - 18 - 7.6. SURVIVAL OF BENEFITS. The provisions of this Article 7 shall be applicable to persons who shall have ceased to be Directors or Officers of the Corporation, and shall inure to the benefit of the heirs, estates, executors and administrators of persons entitled to be indemnified hereunder. 7.7. SUBSEQUENT AMENDMENT. The right to indemnification and Advancement of Expenses conferred in this Article 7 shall be a contract right and no amendment, termination or repeal of this Article 7 or of the relevant provisions of the Act or any other applicable laws shall affect or diminish in any way the rights of any Indemnitee to indemnification or Advancement of Expenses under the provisions hereof with respect to any Proceeding arising out of or relating to any actions, transactions or facts occurring before the final adoption of such amendment, termination or repeal. 7.8. MERGER OR CONSOLIDATION. If the Corporation is merged into or consolidates with another corporation and the Corporation is not the surviving corporation, the surviving corporation shall assume the obligations of the Corporation under this Article 7 with respect to any action, suit, proceeding or investigation arising out of or relating to any actions, transactions or facts occurring at or before the date of such merger or consolidation. 7.9. SUBSEQUENT LEGISLATION. It is the intention of the Corporation to provide indemnification and Advancement of Expenses to Directors and Senior Officers (and to permit the Board of Directors to provide indemnification and Advancement of Expenses to Other Officers) to the fullest extent permitted by applicable law, as applicable law exists as of the date of adoption of these By-Laws or as applicable law may hereafter be amended. If the Massachusetts General Laws are amended after adoption of this Article 7 to expand further the indemnification or Advancement of Expenses permitted to Indemnitees, then the Corporation shall indemnify and provide for the Advancement of Expenses to Directors and Senior Officers (and may indemnify or provide Advancement of Expenses to Other Officers) to the fullest extent permitted by the Massachusetts General Laws, as so amended. No such amendment that purports to diminish or limit the indemnification or Advancement of Expenses permitted to Indemnitees shall be given retroactive effect or applied to facts and circumstances arising before the effective date of such amendment. 7.10. SAVINGS CLAUSE. If this Article 7 or any portion hereof shall be found invalid on any ground by any court of competent jurisdiction, then the Corporation shall nevertheless indemnify and provide Advancement of Expenses to each Director and Senior Officer (and may indemnify or provide Advancement of Expenses to Other Officers) to the fullest extent permitted by any applicable portion of this Article 7 that shall not have been found invalid. 7.11. INSURANCE. The Corporation may maintain insurance, at its expense, to protect itself and any Director, Officer or Employee against any liability of any character asserted against or incurred by the Corporation or any such Director, Officer or Employee, or arising out of any such person's Corporate Status, whether or not the Corporation would have the power to indemnify such person against such liability under the Act or the provisions of this Article 7. - 19 - ARTICLE 8. MISCELLANEOUS PROVISIONS 8.1. FISCAL YEAR. Except as otherwise determined by the Board of Directors, the fiscal year of the Corporation shall be the twelve months ending December 31st. 8.2. SEAL. The seal of the Corporation shall, subject to alteration by the Directors, consist of a flat-faced circular die with the word "Massachusetts", together with the name of the Corporation and the year of its organization cut or engraved thereon. 8.3. REGISTERED AGENT AND REGISTERED OFFICE. The Corporation shall continuously maintain in Massachusetts: (a) a registered agent who may be an officer of the Corporation or another individual, a domestic corporation or not-for-profit domestic corporation, or a foreign corporation or not-for-profit foreign corporation qualified to do business in Massachusetts; and (b a registered office, which may, but need not be, the same as any of its places of business. The business office of the registered agent shall also be the registered office of the Corporation. The Corporation shall record any change of its registered office or registered agent by filing a statement of change with the Secretary of the Commonwealth. 8.4. EXECUTION OF INSTRUMENTS. All deeds, leases, transfers, contracts, bonds, notes and other instruments and obligations to be entered into by the Corporation in the ordinary course of its business without Board of Directors action may be signed on behalf of the Corporation by the Chairman of the Board, President, any Vice President, or Treasurer, or by any other officer, employee or agent of the Corporation as the Board of Directors may authorize. 8.5. VOTING OF SECURITIES. Except as the Directors may otherwise designate, the President or Treasurer may waive notice of, act and appoint any person or persons to act as proxy or attorney-in-fact for this Corporation (with or without power of substitution) at any meeting of the shareholders, members or other constituent parties of any other corporation, organization or entity in which the Corporation holds securities or other type of ownership interest. 8.6. CORPORATE RECORDS TO BE MAINTAINED. The Corporation shall keep in Massachusetts at the principal office of the Corporation, or at an office of its transfer agent, Secretary, Assistant Secretary or registered agent, a copy of such records as are required by law to be so maintained. 8.7. BY-LAW AMENDMENTS. These By-Laws may be amended in the manner provided in the Articles. Notice of any change to the By-Laws by the Directors, stating the substance of such change, shall be given to all shareholders entitled to vote on amending the By-Laws not later than the time that notice of the shareholders' meeting next following such change is required to be given. 8.8. DIRECTOR CONFLICT OF INTEREST. A conflict of interest transaction is a transaction with the Corporation in which a Director (an "INTERESTED DIRECTOR") has a material direct or indirect interest. Without limiting the interests that may create conflict of interest transactions, a Director has an indirect interest in a transaction if another entity in which he has a material financial interest or in which he is a general partner (a "RELATED PARTY") is a party to the transaction, or if another entity of which he is a Director, officer, or trustee or in which he holds another position - 20 - is a party to the transaction and the transaction is or should be considered by the Board of Directors of the Corporation. A conflict of interest transaction is not voidable by the Corporation solely because of the Director's interest in the transaction if: (a) the material facts of the transaction and the Director's interest were disclosed or known to the Board or a committee of the Board, and the Board or committee authorized, approved or ratified the transaction by the vote of a majority of the Directors on the Board or committee who have no direct or indirect interest in the transaction, but a transaction may not be authorized, approved, or ratified by a single Director; or (b) the material facts of the transaction and the Director's interest were disclosed or known to the shareholders entitled to vote and they authorized, approved, or ratified the transaction by the vote of a majority of the shares entitled to vote or (c) the transaction was fair to the Corporation. In the case of (b) above, shares owned by or voted under the control of any Interested Director or Related Party shall not be entitled to vote. Shares owned by or voted under the control of any Interested Director or Related Party shall not be entitled to vote. 8.9. ARTICLES OF ORGANIZATION. All references in these By-Laws to the Articles shall be deemed to refer to the Articles of Organization of the Corporation, as amended and in effect from time to time. - 21 - EX-5.1 7 b52576bfexv5w1.txt EX-5.1 FORM OF OPINION OF FOLEY HOAG LLP REGARDING LEGALITY OF SECURITIES BEING REGISTERED Exhibit 5.1 FORM OF LEGALITY OPINION OF FOLEY HOAG LLP __________________, 200_ Benjamin Franklin Bancorp 58 Main Street P.O. Box 309 Franklin, MA 02038-0309 Ladies and Gentlemen: We are furnishing this opinion of counsel to Benjamin Franklin Bancorp, Inc., a Massachusetts corporation (the "Company"), for filing as Exhibit 5.1 to the Registration Statement on Form S-1 (the "Registration Statement") filed by the Company with the Securities and Exchange Commission under the Securities Act of 1933, as amended, relating to the issuance of shares of the common stock of the Company, no par value (the "Shares") in connection with the Company's conversion from mutual to stock form. In this regard, we have examined the Articles of Organization and Bylaws of the Company, resolutions of the Board of Trustees of the Company, the Plan of Conversion of the Company ("Plan"), and such other documents and matters of law as we deemed appropriate for the purposes of this opinion. Based on the foregoing, it is our opinion that, once it has obtained all necessary regulatory approvals and consummated the conversion pursuant to the terms of the Plan as described in the Registration Statement, the Company will have corporate power adequate for the issuance of the Shares in accordance with the Registration Statement. When certificates for the Shares have been duly executed and countersigned, and delivered against due receipt of consideration therefor as described in the Registration Statement, the Shares will be legally issued, fully paid and non-assessable. We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the reference to our firm under "Legal Matters" in the Prospectus which is part of such Registration Statement. This consent shall not be deemed to be an admission that counsel is an expert within the meaning of Section 7 of the Securities Act of 1933, as amended. Very truly yours, FOLEY HOAG LLP By: __________________________ A Partner EX-8.1 8 b52576bfexv8w1.txt EX-8.1 FORM OF TAX OPINION OF FOLEY HOAG LLP EXHIBIT 8.1 Form of Federal Tax Opinion of Foley Hoag LLP December , 2004 Benjamin Franklin Bancorp, M.H.C. 58 Main Street P.O. Box 309 Franklin, Massachusetts 02038-0927 Re: U.S. Federal Income Taxation of Conversion Ladies and Gentlemen: We have acted as counsel to Benjamin Franklin Bancorp, M.H.C. ("MHC"), a Massachusetts mutual holding company, in connection with the proposed conversion (the "Conversion") of MHC, a Massachusetts chartered mutual holding company, from mutual to stock form of ownership, in accordance with The Benjamin Franklin Bancorp M.H.C. Plan of Conversion adopted by MHC's Board of Trustees on October 28, 2004 (the "Plan"). Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Plan. We have examined the law and such papers, including the Plan, as deemed necessary to render these opinions. As to questions of fact material to our opinions we have relied upon representations set forth in the Plan (including the Exhibits), and such other documents pertaining to the transactions contemplated by the Plan as we have deemed appropriate and necessary. As to questions of fact material to our opinions, we have relied upon representations of MHC contained in a letter of even date addressed to us and attached to this letter (the "Letter of Representation"), without undertaking to verify the same by independent investigation. In our examination we have assumed that (i) the transactions contemplated by the Plan will be consummated in accordance with the terms of the Plan; (ii) each entity that is a party to any of the documents (the "Documents") described in the preceding paragraphs has been duly organized under the laws of its state or country of organization, is validly existing and in good standing under such laws, and is duly qualified and in good standing in each jurisdiction in which it is required to be qualified to engage in the transactions contemplated by the Documents; (iii) each such entity has full power, authority, capacity and legal right to enter into and perform the terms of the Documents and the transactions contemplated thereby; (iv) the copies or originals of the Documents furnished to us are authentic (if originals) or accurate (if copies), those that are contracts or instruments are enforceable and effective in accordance with their terms against all parties thereto, and all signatures are genuine; (v) any representations made in the Documents are, and will continue to be, true and complete, and no default exists under any of the Documents; (vi) the business and affairs of each of the entities that is a party to any of the Documents will be conducted in accordance with the Documents and all relevant laws; (vii) no actions will be taken, no change in any of the Documents will occur, and no other events will occur, after the date hereof, that would have the effect of altering the facts, Documents or Benjamin Franklin Bancorp, M.H.C. December , 2004 assumptions upon which this opinion is based; and (viii) the business reasons for the Conversion will constitute a valid business purpose, within the meaning of Treasury Regulation section 1.368-1(b) and (c). The opinions rendered herein are based upon the provisions of the Internal Revenue Code of 1986, as amended (the "Code"), Treasury Department proposed, temporary and final regulations, judicial decisions, and rulings and administrative interpretations of the Internal Revenue Service (the "IRS"), as each of the foregoing exists on the date hereof. The opinion rendered below is not binding on the IRS or any court of law, and no assurance can be given that legislative or administrative action or judicial decisions that differ from the opinion rendered below will not be forthcoming. Any such differences could be retroactive to transactions or business operations prior to such action or decisions. We express no opinion as to the federal income tax consequences of the Conversion other than those described below, if any, as to any tax consequences under the laws of any jurisdiction other than the United States, or as to the effect of the Conversion on prior transactions, or as to any matter not specifically addressed below. Based on the foregoing, we are of opinion, as of the date hereof and under existing law, that the Conversion will constitute or be part of a reorganization within the meaning of section 368(a) of the Code. We undertake no responsibility to update or supplement our opinion. We are furnishing this letter to you in support of the information set forth under the heading "Tax Aspects of the Conversion and the Chart Bank Acquisition" in the Registration Statement. We hereby consent to the filing of this opinion with the Securities and Exchange Commission as an exhibit to the Registration Statement and to the reference to our firm under such heading in the Registration Statement. In giving such consent, we do not thereby admit that we are in the category of persons whose consent is required under Section 7 of the Securities Act of 1933, as amended. This letter is not to be used, circulated, quoted, or otherwise referred to for any other purpose, and may not be relied upon by any person or entity other than you, without our prior written consent. For purposes only of compliance with Treasury Regulation Section 1.6011-4T(b)(3)(i), we hereby agree that you (and each of your employees, representatives, or other agents) may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of the Conversion and all materials of any kind, including this opinion letter any other tax analyses, that we have provided to you relating to such tax treatment and tax structure; provided, however, that any such information relating to the tax treatment or tax structure must be kept confidential to the extent necessary to comply with applicable securities laws. Very truly yours, Foley Hoag llp By: _________________ A Partner - 2 - EX-10.1.1 9 b52576bfexv10w1w1.txt EX-10.1.1 FORM OF EMPLOYMENT AGREEMENT WITH THOMAS R. VENABLES EXHIBIT 10.1.1 EMPLOYMENT AGREEMENT BETWEEN BENJAMIN FRANKLIN BANCORP, INC. AND THOMAS R. VENABLES TABLE OF CONTENTS 1. EMPLOYMENT......................................................................... 1 2. EFFECTIVE DATE AND TERM............................................................ 1 3. COMPENSATION AND BENEFITS.......................................................... 2 3.1. SALARY........................................................................ 2 3.2. REGULAR BENEFITS.............................................................. 2 3.3. OTHER BENEFITS................................................................ 2 3.4. BUSINESS EXPENSES............................................................. 3 3.5. VACATION...................................................................... 3 3.6. GENERAL....................................................................... 3 4. EXTENT OF SERVICE.................................................................. 3 5. TERMINATION UPON DEATH............................................................. 3 6. DISCHARGE FOR SPECIALLY-DEFINED CAUSE.............................................. 4 6.1. NOTICE AND DETERMINATION OF SPECIALLY-DEFINED CAUSE........................... 4 6.2. SUSPENSION; FINAL DISCHARGE................................................... 5 6.3. TERMINATION OF OBLIGATIONS.................................................... 5 7. TERMINATION BY THE EXECUTIVE....................................................... 5 7.1. TERMINATION BY THE EXECUTIVE FOR GOOD REASON.................................. 5 7.2. OTHER VOLUNTARY TERMINATION BY THE EXECUTIVE.................................. 6 7.3. TERMINATION DUE TO RETIREMENT................................................. 6 7.4. GOOD REASON................................................................... 6 7.5. CHANGE IN CONTROL............................................................. 8 8. TERMINATION BY EITHER EMPLOYER WITHOUT SPECIALLY-DEFINED CAUSE..................... 8 9. CERTAIN TERMINATION BENEFITS....................................................... 9 9.1. EARNINGS TO DATE OF TERMINATION............................................... 9 9.2. LUMP SUM PAYMENT.............................................................. 9 9.3. BENEFIT CONTINUATION.......................................................... 9 9.4. PENSION ADJUSTMENT............................................................ 9 9.5. VESTING OF STOCK AWARDS AND OPTIONS........................................... 9 10. ADJUSTMENT FOR UNAVAILABILITY OF BENEFITS......................................... 10 11. DEATH OR DISABILITY BEFORE COMPLETION OF CHANGE IN CONTROL........................ 10 11.1. CERTAIN PAYMENTS............................................................. 10 11.2. PRELIMINARY CHANGE IN CONTROL................................................ 10 12. DISABILITY........................................................................ 10 12.1. TERMINATION DUE TO DISABILITY................................................ 10
i 12.2. EFFECTIVE DATE OF TERMINATION................................................ 11 13. EXCISE TAXES...................................................................... 12 13.1. COVERED BENEFITS............................................................. 12 13.2. CERTAIN ASSUMPTIONS.......................................................... 12 13.3. TAX INDEMNIFICATION.......................................................... 12 14. CONFIDENTIAL INFORMATION.......................................................... 13 15. NO MITIGATION; NO OFFSET.......................................................... 13 16. INDEMNIFICATION AND INSURANCE..................................................... 13 16.1. INDEMNIFICATION.............................................................. 13 16.2. INSURANCE.................................................................... 13 17. NON-COMPETITION; NON-SOLICITATION................................................. 13 17.1. WHILE EMPLOYED............................................................... 14 17.2. POST-EMPLOYMENT.............................................................. 14 18. MISCELLANEOUS..................................................................... 15 18.1. CONFLICTING AGREEMENTS....................................................... 15 18.2. DEFINITION OF "PERSON"....................................................... 15 18.3. WITHHOLDING.................................................................. 15 18.4. ARBITRATION OF DISPUTES...................................................... 15 18.5. INDEMNIFICATION FOR ATTORNEYS' FEES.......................................... 15 18.6. INTERPRETATION............................................................... 16 18.7. ASSIGNMENT; SUCCESSORS AND ASSIGNS, ETC...................................... 16 18.8. ENFORCEABILITY............................................................... 16 18.9. REDUCTIONS................................................................... 16 18.10. WAIVER...................................................................... 17 18.11. NOTICES..................................................................... 17 18.12. ELECTION OF REMEDIES........................................................ 17 18.13. AMENDMENT................................................................... 17 18.14. NO EFFECT ON LENGTH OF SERVICE.............................................. 17 18.15. ALLOCATION OF OBLIGATIONS AS BETWEEN THE BANK AND THE HOLDING COMPANY....... 17 18.16. PAYMENTS TO ESTATE OR BENEFICIARIES......................................... 18 18.17. ENTIRE AGREEMENT; EFFECT ON PRIOR AGREEMENTS................................ 18 18.18. COUNTERPARTS AND FACSIMILE SIGNATURES....................................... 18 18.19. GOVERNING LAW............................................................... 18
ii EMPLOYMENT AGREEMENT Agreement made as [______], 2005 (this "AGREEMENT"), by and between Benjamin Franklin Bancorp, Inc., a Massachusetts corporation (the "HOLDING COMPANY") and Thomas R. Venables of Weston, Massachusetts (the "EXECUTIVE"). The Holding Company is the parent company of Benjamin Franklin Bank, a Massachusetts chartered savings bank with its executive offices in Franklin, Massachusetts (the "BANK") (the Bank and the Holding Company shall be hereinafter individually and collectively referred to as the "EMPLOYERS"). WITNESSETH WHEREAS, the Employers desire to continue to provide for the Executive's employment by the Holding Company and the Bank; NOW THEREFORE, in consideration of the mutual covenants contained herein, the Holding Company and the Executive agree as follows: 1. EMPLOYMENT. The Executive shall serve the Holding Company and Bank as President and Chief Executive Officer. In such positions, the Executive shall have the duties, responsibilities and authorities determined and designated from time to time by the respective Boards of Directors, including without limitation complete management authority with respect to, and responsibility for, the overall operations and day-to-day business and affairs of the Holding Company and the Bank. The Executive shall serve under the direction and supervision of and report only to the Boards. Notwithstanding the above, the Executive shall not be required to perform any duties and responsibilities (a) which would result in a noncompliance with or violation of any applicable law or regulation or (b) on a regular basis in any locations outside the counties in which the Bank now has branch offices, unless agreed upon by the Executive. 2. EFFECTIVE DATE AND TERM. The Employers agree to employ the Executive during an initial period of three (3) years beginning on the date first above written (the "EFFECTIVE DATE") and ending on the day before the third (3rd) anniversary of the Effective Date, and during the period of any additional extensions described below in this Section 2 (the "TERM OF EMPLOYMENT"). The parties intend that, at any point in time during the Executive's employment hereunder, the then-remaining Term of Employment shall be three years. On the day after the Effective Date and on each day thereafter, the Term of Employment shall be extended by one day, such that on any date the Term of Employment will expire on the day before the third (3rd) anniversary of such date. These extensions shall continue in perpetuity until discontinued by: (i) notice to the Executive given by either Employer that it has elected to discontinue the extensions; (ii) notice by the Executive to either Employer that the Executive has elected to discontinue the extensions; or (iii) termination of the Executive's employment with either Employer, whether by resignation, Disability (as provided in Section 12.1), discharge or otherwise. On the earlier of (i) the date on which such a notice is deemed given or (ii) the effective date of a termination of the Executive's employment with the Employers, the Term of Employment shall be converted to a fixed period of three (3) years ending on the day before the third (3rd) anniversary of such date (provided, however, that the Term of Employment shall terminate on such earlier date as may be specifically provided in this Agreement in the event of the Executive's death, Retirement, Voluntary Termination or termination for Specially-Defined EXHIBIT 10.1.1 Cause). The last day of such term, as so extended from time to time, is herein sometimes referred to as the "EXPIRATION DATE". At least once in each calendar year the Holding Company Board will review this Agreement and the Executive's performance for purposes of determining whether to continue to extend the Agreement and the rationale and results thereof shall be included in the minutes of such Board's meeting. The Board shall give notice to the Executive reasonably promptly after such review if it has decided to discontinue extending the Term of Employment. 3. COMPENSATION AND BENEFITS. The compensation and benefits payable to the Executive under this Agreement shall be as follows, it being understood that (i) references to benefits offered by, or to officers of, the Holding Company are intended to include benefits offered by, or to officers of, the Bank and (ii) payments or benefits required to be provided by the Holding Company may be provided by the Bank: 3.1. SALARY. For all services rendered by the Executive to the Holding Company and its affiliates, the Executive shall be entitled to receive a base salary at an annual rate not less than the Executive's base salary as in effect on the Effective Date, subject to increase from time to time in accordance with the usual practices of the Holding Company with respect to review of compensation of its senior executives. In addition, if the Executive's annual base salary is increased at any time before the Expiration Date, such increased annual base salary shall become a floor below which such annual base salary shall not fall at any future time during the Term of Employment without the Executive's written consent, provided, however, that such increased base salary may be reduced (but not below the level originally in effect on the Effective Date) on a basis consistent with and concurrently with across-the-board salary reductions based on the Employers' financial performance similarly affecting all senior management personnel of the Holding Company and its affiliates. The Executive's salary shall be payable in periodic installments in accordance with the Holding Company's usual practice for its senior executives. 3.2. REGULAR BENEFITS. The Executive shall also be entitled to participate in any and all employee benefit plans, medical insurance plans, disability income plans, retirement plans, bonus incentive plans, and other benefit plans from time to time in effect for senior executives of the Holding Company. Such participation shall be subject to (i) the terms of the applicable plan documents, (ii) generally applicable policies of the Holding Company and (iii) the discretion of the Board of Directors of the Holding Company or any administrative or other committee provided for in or contemplated by such plans. 3.3. OTHER BENEFITS. (a) AUTOMOBILE. The Executive shall also be provided with the use of an automobile at the Employers' expense. The Executive shall comply with such reasonable reporting and expense limitations on the use of the automobile as may be established from time to time by the Employers. The Employers shall include annually on the Executive's Form W-2 any amount attributable to the Executive's personal use of such automobile. (b) SERP. The Executive shall continue to be entitled to the supplemental retirement benefits provided by the Salary Continuation Agreement dated August 22, 2 2002 between the Bank and the Executive. 3.4. BUSINESS EXPENSES. The Holding Company shall reimburse the Executive for all reasonable travel and other business expenses incurred by the Executive in the performance of the Executive's duties and responsibilities, subject to such reasonable requirements with respect to substantiation and documentation as may be specified by the Holding Company. 3.5. VACATION. The Executive shall be entitled to not less than four (4) weeks of vacation per year, to be taken at such times and intervals as shall be determined by the Executive with the approval of the Holding Company, which approval shall not be unreasonably withheld. 3.6. GENERAL. Nothing paid to the Executive under any plan, policy or arrangement currently in effect or made available in the future shall be deemed to be in lieu of other compensation to the Executive as described in this Agreement. 4. EXTENT OF SERVICE. During the Term of Employment, the Executive shall, subject to the direction and supervision of the Boards of Directors of the Holding Company and the Bank, devote the Executive's full time, best efforts and business judgment, skill and knowledge to the advancement of the Employers' interests and to the discharge of the Executive's duties and responsibilities hereunder. The Executive shall not engage in any other business activity, except as may be approved by the Board of Directors of the Holding Company; provided, however, that nothing herein shall be construed as preventing the Executive from: (a) investing the Executive's assets in such form or manner as shall not require any material services on the Executive's part in the operations or affairs of the companies or the other entities in which such investments are made, provided that the Executive may not own any interest in any entity that competes with the Holding Company or any affiliate (other than up to two percent (2%) of the outstanding voting stock of such an entity that is a publicly traded entity); or (b) serving on the board of directors of any company not in competition with the Holding Company or any affiliate, provided that the Executive shall not render any material services with respect to the operations or affairs of any such company; or (c) engaging in religious, charitable or other community or non-profit activities which do not impair the Executive's ability to fulfill the Executive's duties and responsibilities under this Agreement. 5. TERMINATION UPON DEATH. In the event of the Executive's death during the Term of Employment, the Executive's employment (and the Term of Employment) shall terminate on the date of the Executive's death. The Holding Company shall pay to the Executive's beneficiary, designated in writing to the Holding Company prior to the Executive's death (or to the Executive's estate, if the Executive fails to make such designation), (i) any base salary or other compensation earned through the date of death, plus (ii) the Executive's pro rata share (based on the portion of the then-current calendar year during which the Executive was employed before the Executive's death) of the highest of the aggregate annual amounts paid to the Executive (or accrued) as bonuses or other cash incentive compensation for the three calendar years preceding the termination of employment, plus (iii) the base salary that the Executive would have earned 3 for a period of six months following the Executive's death, plus (iv) any other compensation and benefits as may be provided in accordance with the terms and provisions of any applicable plans and programs, if any, of the Holding Company. In addition, the Holding Company shall continue in effect the medical benefits of the Executive's dependents at the level in effect on, and at the same out-of-pocket cost to the Executive as of, the date of death for a six month period commencing on the date of death (or, if such continuation is not permitted by applicable law or if the Holding Company Board so determines in its sole discretion, the Holding Company shall provide the economic equivalent in lieu thereof). 6. DISCHARGE FOR SPECIALLY-DEFINED CAUSE. 6.1. NOTICE AND DETERMINATION OF SPECIALLY-DEFINED CAUSE. The Bank and the Holding Company may terminate the Executive's employment during the Term of Employment for Specially-Defined Cause. Such termination shall be deemed to have occurred for "SPECIALLY-DEFINED CAUSE" only if: (a) the Boards of Directors of each of the Holding Company and the Bank, by separate majority votes of their entire membership, determine that the Executive (i) has been convicted for the commission of a felony from which all final appeals have been taken, or (ii) has willfully and intentionally engaged in dishonest or gross misconduct in connection with the Executive's employment by the Holding Company or any affiliate thereof, in either case that results in material and demonstrable financial harm to the Holding Company or any of its affiliates. No act or failure to act on the part of the Executive shall be considered "willful" unless it is done, or omitted to be done, by the Executive in bad faith or without reasonable belief that the Executive's action or omission was in the best interests of the Holding Company or any affiliate thereof. Any act or failure to act that is based upon authority given pursuant to a resolution duly adopted by the Boards of Directors of the Holding Company and the Bank, or the advice of legal counsel for the Holding Company, shall be conclusively presumed to be done, or omitted to be done, by the Executive in good faith and in the best interests of the Holding Company or any affiliate thereof; and (b) at least forty-five (45) days prior to the votes contemplated by Section 6.1(a), the Holding Company has provided the Executive with notice of intent of the Holding Company and the Bank to discharge the Executive for Specially-Defined Cause, detailing with particularity the facts and circumstances which are alleged to constitute Specially-Defined Cause (the "NOTICE OF INTENT TO DISCHARGE"); and (c) after the giving of the Notice of Intent to Discharge and before the taking of the votes contemplated by Section 6.1(a), the Executive (together with the Executive's legal counsel, if the Executive so desires) is afforded a reasonable opportunity to make both written and oral presentations before the Boards of Directors of the Holding 4 Company and the Bank for the purpose of refuting the alleged grounds for Specially-Defined Cause for the Executive's discharge; and (d) after the votes contemplated by Section 6.1(a), the Holding Company and the Bank have furnished to the Executive a notice of termination which shall specify the effective date of the Executive's termination of employment (which shall in no event be earlier than the date on which such notice is deemed given) and include a copy of a resolution or resolutions adopted by the Boards of Directors of the Holding Company and the Bank authorizing the termination of the Executive's employment for Specially-Defined Cause and stating with particularity the facts and circumstances found to constitute Specially-Defined Cause for the Executive's discharge (the "FINAL DISCHARGE NOTICE"). 6.2. SUSPENSION; FINAL DISCHARGE. Following the giving of a Notice of Intent to Discharge, the Bank and the Holding Company may temporarily suspend the Executive's duties and authority and, in such event, may also suspend the payment of salary and other cash compensation, but not the Executive's participation in retirement, insurance and other employee benefit plans. If the Executive is discharged for Specially-Defined Cause, all payments withheld during the period of suspension shall be deemed forfeited and shall not be payable to the Executive. If the Bank and the Holding Company do not give a Final Discharge Notice to the Executive within one hundred twenty (120) days after giving a Notice of Intent to Discharge, the Notice of Intent to Discharge shall be deemed withdrawn and any future action to discharge the Executive for Specially-Defined Cause shall require the giving of a new Notice of Intent to Discharge. 6.3. TERMINATION OF OBLIGATIONS. In the event of termination pursuant to this Section 6, the Term of Employment shall terminate and the Holding Company shall pay to the Executive an amount equal to the sum of (a) base salary or other compensation earned through the date of termination, plus (b) any other compensation and benefits as may be provided in accordance with the terms and provisions of any applicable plans and programs, if any, of the Holding Company. All other obligations of the Holding Company under this Agreement shall terminate as of the date of termination. 7. TERMINATION BY THE EXECUTIVE 7.1. TERMINATION BY THE EXECUTIVE FOR GOOD REASON. (a) The Executive shall be entitled to terminate the Executive's employment hereunder for or with Good Reason (as defined in Section 7.4). Upon any such termination, the Executive shall be entitled to receive the benefits set forth in Section 9. A termination of employment by the Executive for Good Reason shall be effectuated by giving the Holding Company written notice ("NOTICE OF TERMINATION FOR GOOD REASON") of the termination, setting forth in reasonable detail the specific conduct of the Holding Company that constitutes Good Reason and the specific provision(s) of this Agreement on which the Executive relies. A termination of employment by the Executive for Good Reason shall be effective on the fifth business day following the date when the Notice of Termination for Good Reason is given, unless the notice sets forth a later date 5 EXHIBIT 10.1.1 (which date shall in no event be later than 30 days after the notice is given). (b) The failure to set forth any fact or circumstance in a Notice of Termination for Good Reason shall not constitute a waiver of the right to assert, and shall not preclude the Executive from asserting, such fact or circumstance in an attempt to enforce any right under or provision of this Agreement. 7.2. OTHER VOLUNTARY TERMINATION BY THE EXECUTIVE. During the Term of Employment, the Executive may effect, upon sixty (60) days prior written notice to the Holding Company, a Voluntary Termination of the Executive's employment hereunder and thereupon the Term of Employment (if not already expired) shall end. A "VOLUNTARY TERMINATION" shall mean a termination of employment by the Executive on the Executive's own initiative other than (a) a termination due to death or Disability (as defined in Section 12), (b) a termination for Good Reason (as defined in Section 7.4), (c) a termination due to Retirement (as defined in Section 7.3), or (d) a termination as a result of the normal expiration of the full Term of Employment. If, during the Term of Employment, the Executive's employment is so terminated due to a Voluntary Termination, the Term of Employment shall thereupon end and the Holding Company shall pay to the Executive an amount equal to the sum of (a) base salary or other compensation earned through the date of termination, plus (b) any other compensation and benefits as may be provided in accordance with the terms and provisions of any applicable plans and programs, if any, of the Holding Company. 7.3. TERMINATION DUE TO RETIREMENT. "RETIREMENT" shall mean the termination of the Executive's employment with the Holding Company for any reason by the Executive at any time after the Executive attains "Retirement Age" (as hereinafter defined). "RETIREMENT AGE" shall mean the earlier to occur of (x) age 65 and (y) an age of 60 or greater at which the Holding Company, by vote of the Board of Directors, permits the Executive to retire. The Executive may terminate the Executive's employment hereunder due to Retirement upon thirty (30) days prior written notice to the Holding Company. If, during the Term of Employment, the Executive's employment is so terminated due to Retirement, the Term of Employment shall thereupon end and the Executive shall be entitled to (i) continuation of the medical benefits of the Executive and Executive's dependents at the level in effect on, and at the same out-of-pocket cost to the Executive as of, the date of termination for the one-year period following the termination of the Executive's employment due to Retirement (or, if such continuation is not permitted by applicable law or if the Board of the Holding Company so determines in its sole discretion, the Holding Company shall provide the economic equivalent in lieu thereof), and (ii) any other compensation and benefits as may be provided in accordance with the terms and provisions of any applicable plans and programs, if any, of the Holding Company. 7.4. GOOD REASON. For purposes of this Agreement, the term "GOOD REASON" shall mean any of the following: (a) the failure of the Board of Directors of the Holding Company to elect the Executive to the offices of President and Chief Executive Officer, or to continue the Executive in such offices; (b) the failure of the Board of Directors of the Bank to elect the Executive to the 6 offices of President and Chief Executive Officer, or to continue the Executive in such offices; (c) the failure of the shareholders (whether in an election in which the Executive stands as a nominee or in an election in which the Executive is not a nominee) to elect or re-elect the Executive as a member of the Board of Directors of the Holding Company at the expiration of the Executive's term of membership, unless such failure is a result of the Executive's refusal to stand for election; (d) the failure by either Employer to comply with the provisions of Section 3; (e) any action by either Employer which results in a significant diminution in the Executive's responsibilities, authorities, powers, functions or duties; (f) a material breach by either Employer of any of the provisions of this Agreement which failure or breach shall have continued for thirty (30) days after written notice from the Executive to the Holding Company specifying the nature of such failure or breach; and (g) a determination by the Board of either Employer not to continue to extend the term of this Agreement as provided in Section 2. In addition, "Good Reason" shall include the following events but only if they shall occur within two years following a "Change in Control" (as defined in Section 7.5): (h) a change in the Executive's principal place of employment to a place that is not the principal executive office of the Holding Company, or a relocation of the Holding Company's principal executive office to a location that increases the Executive's commute from the Executive's principal residence to the Holding Company's principal executive office by more than ten (10) miles; (i) the failure by either Employer to continue to provide the Executive with benefits substantially similar to those available to the Executive under any of the life insurance, medical, health and accident, or disability plans or any other material benefit plans in which the Executive was participating at the time of the Change in Control, or the taking of any action by either Employer which would directly or indirectly materially reduce any of such benefits, or the failure by either Employer to provide the Executive with the number of paid vacation days to which the Executive is entitled on the basis of years of service with the Employers in accordance with the Employers' normal vacation policy in effect at the time of the Change in Control; (j) a reasonable determination by the Executive that, as a result of a Change in Control, the Executive is unable to exercise the responsibilities, authorities, powers, functions or duties exercised by the Executive immediately prior to such Change in Control; (k) a reasonable determination by the Executive that, as a result of a Change in Control, the Executive's working conditions have significantly worsened; and 7 EXHIBIT 10.1.1 (l) the failure of the Holding Company to obtain a satisfactory agreement from any successor to assume and agree to perform this Agreement. 7.5. CHANGE IN CONTROL. A "Change in Control" shall be deemed to have occurred in any of the following events: (a) If there has occurred a change in control which the Holding Company would be required to report in response to Item 5.01 of Form 8-K promulgated under the Securities Exchange Act of 1934, as amended (the "1934 ACT"), or, if such regulation is no longer in effect, any regulations promulgated by the Securities and Exchange Commission pursuant to the 1934 Act which are intended to serve similar purposes; (b) When any "person" (as such term is used in Sections 13(d) and 14(d)(2) of the 1934 Act) becomes a "beneficial owner" (as such term is defined in Rule 13d-3 promulgated under the 1934 Act), directly or indirectly, of securities of the Holding Company or the Bank representing twenty-five percent (25%) or more of the total number of votes that may be cast for the election of directors of the Holding Company or the Bank, as the case may be; (c) During any period of two consecutive years, individuals who at the beginning of such period constitute the Board of Directors of the Holding Company, and any new director (other than a director designated by a person who has entered into an agreement with the Holding Company to effect a transaction described in Subsection (b), (d) or (e) of this Section 7.5) whose election by the Board or nomination for election by the Holding Company's stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute at least a majority of the Board of Directors of the Holding Company; (d) The stockholders of the Holding Company approve a merger, share exchange or consolidation ("MERGER OR CONSOLIDATION") of the Holding Company with any other corporation, other than (a) a merger or consolidation which would result in the voting securities of the Holding Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 70% of the combined voting power of the voting securities of the Holding Company or such surviving entity outstanding immediately after such merger or consolidation or (b) a merger or consolidation effected to implement a recapitalization of the Holding Company (or similar transaction) in which no "person" (as hereinabove defined) acquires more than 30% of the combined voting power of the Holding Company's then outstanding securities; or (e) The stockholders of the Holding Company or the Bank approve a plan of complete liquidation of the Holding Company or the Bank or an agreement for the sale or disposition by the Holding Company or the Bank of all or substantially all of the Holding Company's or the Bank's assets. 8. TERMINATION BY EITHER EMPLOYER WITHOUT SPECIALLY-DEFINED CAUSE. The Executive's employment with the Holding Company may be terminated without Specially- 8 EXHIBIT 10.1.1 Defined Cause by the Board of Directors of either Employer, provided, however, that the Holding Company shall have the obligation upon any such termination to make the payments to the Executive provided for under Section 9 of this Agreement. 9. CERTAIN TERMINATION BENEFITS. In the event of termination pursuant to Section 7.1 or 8, the Executive shall be entitled to each of the following benefits: 9.1. EARNINGS TO DATE OF TERMINATION. An amount equal to the sum of (a) base salary or other compensation earned through the date of termination, plus (b) the Executive's pro rata share (based on the portion of the then-current calendar year during which the Executive was employed before termination of the Executive's employment) of the highest of the aggregate annual amounts paid to the Executive (or accrued) as bonuses or other cash incentive compensation for the three calendar years preceding the termination of employment, plus (c) any other compensation and benefits as may be provided in accordance with the terms and provisions of any applicable plans and programs, if any, of the Holding Company. 9.2. LUMP SUM PAYMENT. A lump sum severance benefit equal to three times the Executive's Highest Yearly Compensation. "HIGHEST YEARLY COMPENSATION" shall be the highest Total Compensation of the Executive during the three calendar years preceding the termination of employment. "TOTAL COMPENSATION" for each year shall be the aggregate of (i) all base salary paid for such year; (ii) any bonuses or other cash incentive compensation paid during such year; (iii) any amount which is contributed by the Employers on the Executive's behalf pursuant to a salary reduction agreement and which is not included in the Executive's gross income under Sections 125, 132(f) or 402(e)(3) of the Internal Revenue Code of 1986, as amended; (iv) any amounts earned but deferred with respect to such calendar year, and (v) any other amounts reported on the Executive's Form W-2 (Wages, tips, other compensation box) for such year. The lump sum payment shall be payable to the Executive in one lump-sum on the date of termination of employment. 9.3. BENEFIT CONTINUATION. Continuation of the disability and medical benefits described in Section 3.2 existing on the date of termination at the level in effect on, and at the same out-of-pocket cost to the Executive as of, the date of termination for a period of three years following the Executive's date of termination of employment. 9.4. PENSION ADJUSTMENT. An amount equal to the excess of (a) the actuarial value of the benefits which the Executive would have accrued under each of the Holding Company's qualified and non-qualified pension plans in which the Executive was a participant as of the date of termination of employment if (i) the Executive's employment had continued at the Executive's level of total compensation (determined as of the date of termination of employment) for a period of three years following the Executive's date of termination of employment and (ii) each such plan had remained in effect during such three-year period, over (b) the actuarial value of the Executive's actual benefits under such qualified and non-qualified pension plans. The actuarial value of such benefits shall be determined by the Compensation Committee of the Holding Company in its reasonable discretion. 9.5. VESTING OF STOCK AWARDS AND OPTIONS. There shall be an acceleration of all vesting provisions, so that as of the date of termination of the Executive's employment, all stock 9 EXHIBIT 10.1.1 awards made by the Holding Company to the Executive, to the extent then unvested or forfeitable, shall become immediately and fully vested and non-forfeitable, and all options to purchase Common Stock of the Holding Company, to the extent then not exercisable, shall become immediately and fully exercisable. 10. ADJUSTMENT FOR UNAVAILABILITY OF BENEFITS. If, in spite of the provisions of this Agreement, benefits or service credits under any benefit plan provided by a third party shall not be payable or provided under any such plan to the Executive, or to the Executive's dependents, beneficiaries or estate, because the Executive is no longer deemed to be an employee of the Holding Company or the Bank, the Holding Company shall pay or provide for payment of such benefits and service credits for such benefits to the Executive, or to the Executive's dependents, beneficiaries or estate. 11. DEATH OR DISABILITY BEFORE COMPLETION OF CHANGE IN CONTROL. 11.1. CERTAIN PAYMENTS. The Executive shall be entitled to receive payments provided for under Section 9 of this Agreement that would have been payable if the Executive had resigned with Good Reason on the date of the Executive's termination of employment if (a) the Executive's employment terminates due to Disability pursuant to Section 12 or due to death, and (b) either (i) such termination of employment occurred within one (1) year after the occurrence of a Change in Control; or (ii) such termination occurred within one (1) year after the occurrence of a Preliminary Change in Control (as hereinafter defined), AND, in addition, a Change in Control occurs within two (2) years after such termination of employment. 11.2. PRELIMINARY CHANGE IN CONTROL. "PRELIMINARY CHANGE IN CONTROL" shall mean each of (i) the signing of a definitive agreement for a transaction that, if consummated, would result in a Change in Control, (ii) the commencement of a tender offer that, if successful, would result in a Change in Control, and (iii) the circulation of a proxy statement seeking proxies in opposition to management in an election contest that, if successful, would result in a Change in Control. Any payment required to be made pursuant to this Section 11 shall be deferred without interest until, and shall be payable immediately upon, the actual occurrence of a Change in Control. Payments to be made pursuant to this Section 11 shall be in lieu of and in substitution for payments required to be made in connection with death or disability pursuant to Section 5 or Section 12. 12. DISABILITY. 12.1. TERMINATION DUE TO DISABILITY. Either Employer may terminate the Executive's employment upon a determination, by vote of a majority of the members of its Board of Directors, acting in reliance on the written advice of a medical professional acceptable to the Board, that the Executive is suffering from a physical or mental impairment which, at the 10 EXHIBIT 10.1.1 date of the determination, has prevented the Executive from performing the Executive's assigned duties on a substantially full-time basis for a period of at least one hundred and eighty (180) days during the period of one (1) year ending with the date of the determination or is likely to result in death or prevent the Executive from performing the Executive's assigned duties on a substantially full-time basis for a period of at least one hundred and eighty (180) days during the period of one (1) year beginning with the date of the determination (such impairment, the "DISABILITY"). In such event: (a) The Holding Company shall pay and deliver to the Executive an amount equal to the sum of (x) base salary or other compensation earned through the date of termination, plus (y) any other compensation and benefits as may be provided in accordance with the terms and provisions of any applicable plans and programs, if any, of the Holding Company. (b) In addition to the amounts payable pursuant to Section 12.1(a), the Holding Company shall continue to pay the Executive the Executive's base salary, at the annual rate in effect for the Executive immediately prior to the termination of the Executive's employment, during the "Initial Continuation Period." The "INITIAL CONTINUATION PERIOD" shall commence on the date of termination of employment pursuant to Section 12.1 and shall end on the earliest of: (i) the expiration of one hundred and eighty (180) days after the date of termination of the Executive's employment; (ii) the date on which long-term disability insurance benefits are first payable to the Executive under any long-term disability insurance plan ("LTD PLAN") covering employees of the Bank or the Holding Company (the "LTD ELIGIBILITY DATE"); (iii) the date of the Executive's death; and (iv) the Expiration Date. If the end of the Initial Continuation Period is neither the LTD Eligibility Date nor the date of the Executive's death, the Holding Company shall continue to pay the Executive the Executive's base salary, at an annual rate equal to sixty percent (60%) of the annual rate in effect for the Executive immediately prior to the termination of the Executive's employment (the "60% AMOUNT"), during an additional period ending on the earliest of the LTD Eligibility Date, the date of the Executive's death and the Expiration Date. While receiving disability payments under such LTD Plan, the Holding Company shall pay to the Executive an additional payment of such an amount, if any, as may be necessary so that the aggregate of such additional payment and the Executive's disability income payments will equal the 60% Amount, and the Executive shall continue to participate in the Employers' benefit plans and to receive other benefits as specified in Section 3.2 until the Expiration Date, with all such benefits to be at the level in effect on, and at the same out-of-pocket cost to the Executive as of, the date of Disability. 12.2. EFFECTIVE DATE OF TERMINATION. A termination of employment due to Disability under this Section 12 shall be effected by notice of termination given to the Executive by the applicable Employer and shall take effect on the later of the effective date of termination specified in such notice or the date on which the notice of termination is deemed given to the Executive. A termination of employment by either Employer due to Disability under this Section 12 shall be effective to terminate the Executive's employment with each of the Bank and the Holding Company. 11 EXHIBIT 10.1.1 13. EXCISE TAXES. 13.1. COVERED BENEFITS. "COVERED BENEFITS" shall mean any benefit or payment from the Holding Company or any affiliate or any successor in interest to any of the foregoing that will be (or in the opinion of Tax Counsel (as defined below) might reasonably be expected to be) subject to any excise tax (the "EXCISE TAX") imposed under Section 4999 of the Internal Revenue Code of 1986, as amended (the "CODE"). In the event that at any time during or after the Term of Employment the Executive shall receive any Covered Benefits, the Holding Company shall pay to the Executive an additional amount (the "GROSS-UP PAYMENT") such that the net amount retained by the Executive from the Gross-Up Payment, after deduction of any federal, state and local income taxes, Excise Tax, and FICA and Medicare withholding taxes on the Gross-Up Payment, shall be equal to the Excise Tax on the Covered Benefits. For purposes of determining the amount of such Excise Tax on the Covered Benefits, the amount of the Covered Benefits that shall be taken into account in calculating the Excise Tax shall be equal to (i) the Covered Benefits, minus (ii) the amount of such Covered Benefits that, in the opinion of tax counsel selected by the Holding Company and reasonably acceptable to the Executive ("TAX COUNSEL"), are not parachute payments (within the meaning of Section 280G(b)(1) of the Code). 13.2. CERTAIN ASSUMPTIONS. For purposes of this Section 13, the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Excise Tax is payable and state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive's residence on the effective date of the Executive's termination, net of the reduction in federal income taxes which could be obtained from deduction of such state and local taxes. Except as otherwise provided herein, all determinations required to be made under this Section 13 shall be made by Tax Counsel, which determinations shall be conclusive and binding on the Executive and the Employers, absent manifest error. 13.3. TAX INDEMNIFICATION. The Holding Company shall indemnify and hold the Executive harmless from any and all losses, costs and expenses (including without limitation, reasonable attorney's fees, reasonable accountant's fees, interest, fines and penalties of any kind) which the Executive incurs as a result of any administrative or judicial review of the Executive's liability under Section 4999 of the Code by the Internal Revenue Service or any comparable state agency through and including a final judicial determination or final administrative settlement of any dispute arising out of the Executive's liability for the Excise Tax or otherwise relating to the classification for purposes of Section 280G of the Code of any of the Covered Benefits or other payment or benefit in the nature of compensation made or provided to the Executive by the Holding Company. The Executive shall promptly notify the Holding Company in writing whenever the Executive receives notice of the commencement of any judicial or administrative proceeding, formal or informal, in which the federal tax treatment under Section 4999 of the Code of any amount paid or payable under this Agreement or otherwise is being reviewed or is in dispute (including a notice of audit or other inquiry concerning the reporting of the Executive's liability under Section 4999). The Holding Company may assume control at its expense over all legal and accounting matters pertaining to such federal or state tax treatment (except to the extent necessary or appropriate for the Executive to resolve any such proceeding with respect to any matter unrelated to the Covered Benefits or other payment or benefit in the nature of compensation made or provided to the Executive by the Holding Company) and the 12 EXHIBIT 10.1.1 Executive shall cooperate fully with the Holding Company in any such proceeding. The Executive shall not enter into any compromise or settlement or otherwise prejudice any rights the Holding Company may have in connection therewith without prior consent of the Holding Company. In the event that the Holding Company elects not to assume control over such matters, the Holding Company shall promptly reimburse the Executive for all expenses related thereto as and when incurred upon presentation of appropriate documentation relating thereto. 14. CONFIDENTIAL INFORMATION. The Executive will not disclose to any other Person (as defined in Section 18.2) (except as required by applicable law or in connection with the performance of the Executive's duties and responsibilities hereunder), or use for the Executive's own benefit or gain, any confidential information of the Holding Company or any affiliate obtained by the Executive incident to the Executive's employment with the Holding Company or the Bank. The term "CONFIDENTIAL INFORMATION" includes, without limitation, financial information, business plans, prospects and opportunities (such as lending relationships, financial product developments, or possible acquisitions or dispositions of business or facilities) which have been discussed or considered by the management of the Holding Company or the Bank but does not include any information which has become part of the public domain by means other than the Executive's nonobservance of the Executive's obligations hereunder. 15. NO MITIGATION; NO OFFSET. In the event of any termination of employment under this Agreement, the Executive shall be under no obligation to seek other employment or to mitigate damages, and there shall be no offset against any amounts due to the Executive under this Agreement for any reason, including, without limitation, on account of any remuneration attributable to any subsequent employment that the Executive may obtain. Any amounts due under this Agreement are in the nature of severance payments or liquidated damages, or both, and are not in the nature of a penalty. 16. INDEMNIFICATION AND INSURANCE. 16.1. INDEMNIFICATION. To the maximum extent permitted under applicable law, during the Term of Employment and for a period of six years thereafter, the Holding Company shall indemnify the Executive against and hold the Executive harmless from any costs, liabilities, losses and exposures to the fullest extent and on the most favorable terms and conditions that similar indemnification is offered to any director or officer of the Holding Company or any affiliate thereof. 16.2. INSURANCE. During the Term of Employment and for a period of six years thereafter, the Holding Company shall cause the Executive to be covered by and named as an insured under any policy or contract of insurance obtained by either Employer to insure directors and officers against personal liability for acts or omissions in connection with service as an officer or director of the Holding Company or the Bank or service in other capacities at its request. The coverage provided to the Executive pursuant to this Section 16 shall be of the same scope and on the same terms and conditions as the coverage (if any) provided to other officers or directors of the Holding Company. 17. NON-COMPETITION; NON-SOLICITATION. For purposes of this Section 17, the term "EMPLOYER" shall include not only each of the Holding Company and the Bank but also every 13 EXHIBIT 10.1.1 other affiliate of the Holding Company. 17.1. WHILE EMPLOYED. During such time as the Executive is employed hereunder, the Executive will not compete with the banking or any other business conducted by any Employer during the period of the Executive's employment hereunder, nor will the Executive attempt to hire any employee of any Employer, assist in such hiring by any other Person, encourage any such employee to terminate his or her relationship with any Employer, or interfere with or damage (or attempt to interfere with or damage) any relationship between any Employer and any customers of any Employer or solicit or encourage any customer of any Employer to terminate its relationship with any Employer or to conduct with any other person any business or activity which such customer conducts or could conduct with any Employer. 17.2. POST-EMPLOYMENT. The provisions of this Section 17.2 shall not be binding on the Executive (and shall become of no further force or effect) after a Change in Control shall have occurred. The Executive agrees that during the one-year period following termination of the Executive's Employment for any reason (the "NONCOMPETITION PERIOD"), the Executive will not, directly or indirectly, (i) become a director, officer, employee, principal, agent, consultant or independent contractor of any insured depository institution, trust company or parent holding company of any such institution or company which has an office in any city or town in which the Bank maintains an office (a "COMPETING BUSINESS"), provided, however, that this provision shall not prohibit the Executive from (x) owning bonds, non-voting preferred stock or up to five percent (5%) of the outstanding common stock of any such entity if such common stock is publicly traded and (y) being employed by a Competing Business outside of such cities and towns so long as the Executive is in compliance with the provisions of the remainder of this Section 17.2. During the Noncompetition Period, the Executive will not, directly or indirectly, (i) solicit or encourage any person who was employed by any Employer on the date of termination of the Executive's employment to leave his or her employment at any Employer, or (ii) encourage or assist any person with whom the Executive has an employment or consulting or other similar relationship in identifying, recruiting or soliciting any commercial loan officer or relationship manager who was employed by any Employer on the date of termination of the Executive's employment ("TERMINATION DATE"), or (iii) assist such person in formulating an employment package for such officer or manager to the extent such assistance involves the use of confidential information (as that term is defined in Section 14). The provisions of this Section 17.2 shall not be construed to prohibit any person who employs the Executive as an employee or consultant from advertising generally for employees in the markets served by any Employer or from hiring any candidate, whether or not such person was employed by an Employer, so long as the Executive does not breach the covenants set forth in this Section 17.2. During the Noncompetition Period, the Executive will not, directly or indirectly, solicit or encourage or assist others to solicit any business from any person or entity which, together with its affiliates, had commercial loans outstanding from the Bank which in the aggregate amounted to $1,000,000 or more at any time within the six-month period prior to the Termination Date ("COMMERCIAL LOAN CUSTOMERS"). This Section 17.2 shall not be construed to prohibit any of the Executive's future employers from making general public announcements to the effect that the Executive has become affiliated with such new employer or holding receptions to introduce the Executive to persons other than Commercial Loan Customers. The Executive agrees to inform any potential new employer of the covenant set forth in this Section 17.2 prior to accepting employment during the Noncompetition Period. 14 EXHIBIT 10.1.1 18. MISCELLANEOUS. 18.1. CONFLICTING AGREEMENTS. The Executive hereby represents and warrants that the execution of this Agreement and the performance of the Executive's obligations hereunder will not breach or be in conflict with any other agreement to which the Executive is a party or is bound, and that the Executive is not now subject to any covenants against competition or similar covenants which would affect the performance of the Executive's obligations hereunder. 18.2. DEFINITION OF "PERSON". For purposes of this Agreement, the term "PERSON" shall mean an individual, a corporation, an association, a partnership, an estate, a trust and any other entity or organization. 18.3. WITHHOLDING. All payments made under this Agreement shall be net of any tax or other amounts required to be withheld under applicable law. 18.4. ARBITRATION OF DISPUTES. Any controversy or claim arising out of or relating to this Agreement or the breach thereof shall be settled by arbitration in accordance with the laws of The Commonwealth of Massachusetts by three arbitrators, one of whom shall be appointed by the Holding Company, one by the Executive and the third by the first two arbitrators. If the first two arbitrators cannot agree on the appointment of a third arbitrator, then the third arbitrator shall be appointed by the American Arbitration Association in the City of Boston. Such arbitration shall be conducted in the City of Boston in accordance with the rules of the American Arbitration Association, except with respect to the selection of arbitrators which shall be as provided in this Section 18.4. Judgment upon the award rendered by the arbitrators may be entered in any court having jurisdiction thereof. 18.5. INDEMNIFICATION FOR ATTORNEYS' FEES. The Holding Company shall indemnify, hold harmless and defend the Executive against reasonable costs, including legal fees and expenses (collectively, "EXPENSES"), incurred by the Executive in connection with or arising out of any action, suit, proceeding (including any tax controversy) or contest in which the Executive may be involved, as a result of the Executive's efforts, in good faith, to defend or enforce the terms of this Agreement. For purposes of this Agreement, any settlement agreement which provides for payment of any amounts in settlement of the Holding Company's or the Bank's obligations hereunder shall be conclusive evidence of the Executive's entitlement to indemnification hereunder, and any such indemnification payments shall be in addition to amounts payable pursuant to such settlement agreement, unless such settlement agreement expressly provides otherwise. Unless it is determined that under the circumstances recovery by the Executive of all or a part of any such Expenses would be unjust, the Holding Company shall pay as incurred, to the full extent permitted by law, all Expenses that the Executive may reasonably incur as a result of or in connection with the Executive's consultation with legal counsel or arising out of any action, suit, proceeding, tax controversy or contest (regardless of the outcome thereof) by the Holding Company, the Executive or others regarding the validity or enforceability of, or liability under, any provision of this Agreement or any guarantee of performance thereof (including as a result of any contest by the Executive about the amount of any payment pursuant to this Agreement), plus in each case interest on any delayed payment at the applicable federal rate provided for in Section 7872(f)(2)(A) of the Code. This Section 18.5 shall apply whether such consultation, action, suit, proceeding, tax controversy or contest arises 15 before, on, after or as a result of a Change of Control and shall continue in effect notwithstanding the termination or expiration of this Agreement or the Term of Employment. 18.6. INTERPRETATION. The recitals hereto constitute an integral part of this Agreement. References to Sections include subsections, which are part of the related Section (e.g., a section numbered "Section 5.5" would be part of "Section 5" and references to "Section 5" would also refer to material contained in the subsection described as "Section 5.5"). 18.7. ASSIGNMENT; SUCCESSORS AND ASSIGNS, ETC. (a) This Agreement is personal to the Executive and, without the prior written consent of the Holding Company, shall not be assignable by the Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive's legal representatives. (b) This Agreement shall inure to the benefit of and be binding upon the Holding Company and its successors and permitted assigns. (c) The Holding Company may not assign this Agreement or any interest herein without the prior written consent of the Executive and without such consent any attempted transfer or assignment shall be null and of no effect; provided, however, that the Holding Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Holding Company expressly to assume and to agree to perform this Agreement in the same manner and to the same extent that the Holding Company would have been required to perform it if no such succession had taken place. As used in this Agreement, "the Holding Company" shall mean both the Holding Company as defined above and any such successor that assumes and agrees to perform this Agreement, by operation of law or otherwise. 18.8. ENFORCEABILITY. If any portion or provision of this Agreement shall to any extent be declared illegal or unenforceable by a court of competent jurisdiction, then the remainder of this Agreement, or the application of such portion or provision in circumstances other than those as to which it is so declared illegal or unenforceable, shall not be affected thereby, and each portion and provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law. 18.9. REDUCTIONS. Notwithstanding anything to the contrary contained in this Agreement, any and all payments and benefits to be provided to the Executive hereunder are subject to reduction to the extent required by applicable statutes, regulations, rules and directives of federal, state and other governmental and regulatory bodies having jurisdiction over the Bank or the Holding Company. The Executive confirms that the Executive is aware of the fact that the Federal Deposit Insurance Corporation has the power to preclude the Bank from making payments to the Executive under this Agreement under certain circumstances. The Executive agrees that neither the Bank nor the Holding Company shall be deemed to be in breach of this Agreement if it is precluded from making a payment otherwise payable hereunder by reason of regulatory requirements binding on the Bank or the Holding Company, as the case may be. 16 18.10. WAIVER. No waiver of any provision hereof shall be effective unless made in writing and signed by the waiving party. The failure of any party to require the performance of any term or obligation of this Agreement, or the waiver by any party of any breach of this Agreement, shall not prevent any subsequent enforcement of such term or obligation or be deemed a waiver of any subsequent breach. 18.11. NOTICES. Any notices, requests, demands and other communications provided for by this Agreement shall be sufficient if in writing and delivered in person or sent by registered or certified mail, postage prepaid, and addressed to the Executive at the Executive's last known address on the books of the Holding Company or, in the case of the Holding Company, at its main office, attention of the Board of Directors. 18.12. ELECTION OF REMEDIES. An election by the Executive to resign for Good Reason under the provisions of this Agreement shall not constitute a breach by the Executive of any agreement the Executive may have with the Holding Company and shall not be deemed a voluntary termination of employment by the Executive for the purpose of interpreting the provisions of any of the Holding Company's benefit plans, programs or policies. 18.13. AMENDMENT. This Agreement may be amended or modified only by a written instrument signed by the Executive and by a duly authorized representative of the Holding Company. 18.14. NO EFFECT ON LENGTH OF SERVICE. Nothing in this Agreement shall be deemed to prohibit the Holding Company or the Bank from terminating the Executive's employment before the end of the Term of Employment with or without notice for any reason. This Agreement shall determine the relative rights and obligations of the Bank, the Holding Company and the Executive in the event of any such termination. In addition, nothing in this Agreement shall require the termination of the Executive's employment at the expiration of the Term of Employment. Any continuation of the Executive's employment beyond the expiration of the Term of Employment shall be on an "at-will" basis unless the Bank, the Holding Company and the Executive agree otherwise. 18.15. ALLOCATION OF OBLIGATIONS AS BETWEEN THE BANK AND THE HOLDING COMPANY. The parties understand that the Executive will perform substantial services for the Holding Company, the Bank, and other affiliates of the Holding Company. Unless otherwise determined by the Board of Directors of the Holding Company, the Executive shall not be entitled to compensation in addition to the compensation set forth in Section 3 of this Agreement as a result of the Executive's serving as an officer of any affiliate of the Holding Company. The Bank and the Holding Company shall apportion between them the amounts to be paid under this Agreement, based upon the services rendered by the Executive to each of the Bank and the Holding Company, respectively. Any entitlement of the Executive to severance compensation or other termination benefits under this Agreement shall be determined on the basis of the aggregate compensation payable to the Executive by the Bank and the Holding Company, and liability therefor shall be apportioned between the Bank and the Holding Company in the same manner as compensation paid to the Executive for services to each of them. It is the intent and purpose of this Section 18.15 that the Executive have the same legal and economic rights that the Executive would have if all of the Executive's services were rendered to and all of the Executive's 17 compensation were paid by the Holding Company. 18.16. PAYMENTS TO ESTATE OR BENEFICIARIES. In the event of the Executive's death prior to the completion by the Holding Company of all payments due the Executive under this Agreement, the Holding Company shall continue such payments (other than payments which by their terms cease upon death) to the Executive's beneficiary designated in writing to the Holding Company prior to the Executive's death (or to the Executive's estate, if the Executive fails to make such designation) and, as applicable, to the Executive's surviving dependents. 18.17. ENTIRE AGREEMENT; EFFECT ON PRIOR AGREEMENTS. This Agreement constitutes the entire agreement between the parties pertaining to its subject matter and supersedes all prior and contemporaneous agreements, understandings, negotiations, prior draft agreements, and discussions of the parties, whether oral or written. This Agreement specifically amends and restates and supersedes and replaces in its entirety that certain Employment Agreement, dated as of May 1, 2002, by and among the Holding Company, the Bank and the Executive. 18.18. COUNTERPARTS AND FACSIMILE SIGNATURES. This Agreement may be executed in two or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each party and delivered to the other party, it being understood that all parties need not sign the same counterpart. This Agreement may be executed by facsimile signatures. 18.19. GOVERNING LAW. This is a Massachusetts contract and shall be construed under and be governed in all respects by the laws of The Commonwealth of Massachusetts without giving effect to its principles of conflicts of laws. * * * * * * 18 IN WITNESS WHEREOF, this Agreement has been executed as a sealed instrument by the Holding Company, by its duly authorized officer, and by the Executive, as of the date first above written. ATTEST: BENJAMIN FRANKLIN BANCORP, INC. __________________________________ By:__________________________________ Title:_______________________________ [Seal] WITNESS EXECUTIVE __________________________________ _____________________________________ Thomas R. Venables The undersigned hereby unconditionally guarantees the obligations of the Holding Company under the foregoing Agreement. BENJAMIN FRANKLIN BANK By:_______________________________ Title:____________________________ 19 EX-10.1.2 10 b52576bfexv10w1w2.txt EX-10.1.2 FORM OF EMPLOYMENT AGREEMENT WITH CLAIRE S. BEAN EXHIBIT 10.1.2 EMPLOYMENT AGREEMENT BETWEEN BENJAMIN FRANKLIN BANCORP, INC. AND CLAIRE S. BEAN TABLE OF CONTENTS 1. EMPLOYMENT..................................................................... 1 2. EFFECTIVE DATE AND TERM........................................................ 1 3. COMPENSATION AND BENEFITS...................................................... 2 3.1. SALARY.................................................................... 2 3.2. REGULAR BENEFITS.......................................................... 2 3.3. OTHER BENEFITS............................................................ 2 3.4. BUSINESS EXPENSES......................................................... 2 3.5. VACATION.................................................................. 3 3.6. GENERAL................................................................... 3 4. EXTENT OF SERVICE.............................................................. 3 5. TERMINATION UPON DEATH......................................................... 3 6. DISCHARGE FOR SPECIALLY-DEFINED CAUSE.......................................... 4 6.1. NOTICE AND DETERMINATION OF SPECIALLY-DEFINED CAUSE....................... 4 6.2. SUSPENSION; FINAL DISCHARGE............................................... 5 6.3. TERMINATION OF OBLIGATIONS................................................ 5 7. TERMINATION BY THE EXECUTIVE................................................... 5 7.1. TERMINATION BY THE EXECUTIVE FOR GOOD REASON.............................. 5 7.2. OTHER VOLUNTARY TERMINATION BY THE EXECUTIVE.............................. 6 7.3. TERMINATION DUE TO RETIREMENT............................................. 6 7.4. GOOD REASON............................................................... 6 7.5. CHANGE IN CONTROL......................................................... 7 8. TERMINATION BY EITHER EMPLOYER WITHOUT SPECIALLY-DEFINED CAUSE................. 8 9. CERTAIN TERMINATION BENEFITS................................................... 8 9.1. EARNINGS TO DATE OF TERMINATION........................................... 8 9.2. LUMP SUM PAYMENT.......................................................... 9 9.3. BENEFIT CONTINUATION...................................................... 9 9.4. PENSION ADJUSTMENT........................................................ 9 9.5. VESTING OF STOCK AWARDS AND OPTIONS....................................... 9 10. ADJUSTMENT FOR UNAVAILABILITY OF BENEFITS..................................... 9 11. DEATH OR DISABILITY BEFORE COMPLETION OF CHANGE IN CONTROL.................... 10 11.1. CERTAIN PAYMENTS......................................................... 10 11.2. PRELIMINARY CHANGE IN CONTROL............................................ 10 12. DISABILITY.................................................................... 10 12.1. TERMINATION DUE TO DISABILITY............................................ 10
i 12.2. EFFECTIVE DATE OF TERMINATION............................................ 11 13. EXCISE TAXES.................................................................. 11 13.1. COVERED BENEFITS......................................................... 11 13.2. CERTAIN ASSUMPTIONS...................................................... 12 13.3. TAX INDEMNIFICATION...................................................... 12 14. CONFIDENTIAL INFORMATION...................................................... 12 15. NO MITIGATION; NO OFFSET...................................................... 13 16. INDEMNIFICATION AND INSURANCE................................................. 13 16.1. INDEMNIFICATION.......................................................... 13 16.2. INSURANCE................................................................ 13 17. NON-COMPETITION; NON-SOLICITATION............................................. 13 17.1. WHILE EMPLOYED........................................................... 13 17.2. POST-EMPLOYMENT.......................................................... 14 18. MISCELLANEOUS................................................................. 14 18.1. CONFLICTING AGREEMENTS................................................... 14 18.2. DEFINITION OF "PERSON"................................................... 15 18.3. WITHHOLDING.............................................................. 15 18.4. ARBITRATION OF DISPUTES.................................................. 15 18.5. INDEMNIFICATION FOR ATTORNEYS' FEES...................................... 15 18.6. INTERPRETATION........................................................... 15 18.7. ASSIGNMENT; SUCCESSORS AND ASSIGNS, ETC.................................. 16 18.8. ENFORCEABILITY........................................................... 16 18.9. REDUCTIONS............................................................... 16 18.10. WAIVER.................................................................. 16 18.11. NOTICES................................................................. 17 18.12. ELECTION OF REMEDIES.................................................... 17 18.13. AMENDMENT............................................................... 17 18.14. NO EFFECT ON LENGTH OF SERVICE.......................................... 17 18.15. ALLOCATION OF OBLIGATIONS AS BETWEEN THE BANK AND THE HOLDING COMPANY... 17 18.16. PAYMENTS TO ESTATE OR BENEFICIARIES..................................... 17 18.17. ENTIRE AGREEMENT; EFFECT ON PRIOR AGREEMENTS............................ 18 18.18. COUNTERPARTS AND FACSIMILE SIGNATURES................................... 18 18.19. GOVERNING LAW........................................................... 18
ii EMPLOYMENT AGREEMENT Agreement made as [______], 2005 (this "AGREEMENT"), by and between Benjamin Franklin Bancorp, Inc., a Massachusetts corporation (the "HOLDING COMPANY") and Claire S. Bean of Newton, Massachusetts (the "EXECUTIVE"). The Holding Company is the parent company of Benjamin Franklin Bank, a Massachusetts chartered savings bank with its executive offices in Franklin, Massachusetts (the "BANK") (the Bank and the Holding Company shall be hereinafter individually and collectively referred to as the "EMPLOYERS"). WITNESSETH WHEREAS, the Employers desire to continue to provide for the Executive's employment by the Holding Company and the Bank; NOW THEREFORE, in consideration of the mutual covenants contained herein, the Holding Company and the Executive agree as follows: 1. EMPLOYMENT. The Executive shall serve the Holding Company and Bank as Executive Vice President and Chief Financial Officer. In such positions, the Executive shall have the duties, responsibilities and authorities determined and designated from time to time by the respective Boards of Directors and the Chief Executive Officer, including without limitation complete management authority with respect to, and responsibility for, the financial operations and affairs of the Holding Company and the Bank. Notwithstanding the above, the Executive shall not be required to perform any duties and responsibilities (a) which would result in a noncompliance with or violation of any applicable law or regulation or (b) on a regular basis in any locations outside the counties in which the Bank now has branch offices, unless agreed upon by the Executive. 2. EFFECTIVE DATE AND TERM. The Employers agree to employ the Executive during an initial period of three (3) years beginning on the date first above written (the "EFFECTIVE DATE") and ending on the day before the third (3rd) anniversary of the Effective Date, and during the period of any additional extensions described below in this Section 2 (the "TERM OF EMPLOYMENT"). The parties intend that, at any point in time during the Executive's employment hereunder, the then-remaining Term of Employment shall be three years. On the day after the Effective Date and on each day thereafter, the Term of Employment shall be extended by one day, such that on any date the Term of Employment will expire on the day before the third (3rd) anniversary of such date. These extensions shall continue in perpetuity until discontinued by: (i) notice to the Executive given by either Employer that it has elected to discontinue the extensions; (ii) notice by the Executive to either Employer that the Executive has elected to discontinue the extensions; or (iii) termination of the Executive's employment with either Employer, whether by resignation, Disability (as provided in Section 12.1), discharge or otherwise. On the earlier of (i) the date on which such a notice is deemed given or (ii) the effective date of a termination of the Executive's employment with the Employers, the Term of Employment shall be converted to a fixed period of three (3) years ending on the day before the third (3rd) anniversary of such date (provided, however, that the Term of Employment shall terminate on such earlier date as may be specifically provided in this Agreement in the event of the Executive's death, Retirement, Voluntary Termination or termination for Specially-Defined Cause). The last day of such term, as so extended from time to time, is herein sometimes referred to as the "EXPIRATION DATE". At least once in each calendar year the Holding Company Board will review this Agreement and the Executive's performance for purposes of determining whether to continue to extend the Agreement and the rationale and results thereof shall be included in the minutes of such Board's meeting. The Board shall give notice to the Executive reasonably promptly after such review if it has decided to discontinue extending the Term of Employment. 3. COMPENSATION AND BENEFITS. The compensation and benefits payable to the Executive under this Agreement shall be as follows, it being understood that (i) references to benefits offered by, or to officers of, the Holding Company are intended to include benefits offered by, or to officers of, the Bank and (ii) payments or benefits required to be provided by the Holding Company may be provided by the Bank: 3.1. SALARY. For all services rendered by the Executive to the Holding Company and its affiliates, the Executive shall be entitled to receive a base salary at an annual rate not less than the Executive's base salary as in effect on the Effective Date, subject to increase from time to time in accordance with the usual practices of the Holding Company with respect to review of compensation of its senior executives. In addition, if the Executive's annual base salary is increased at any time before the Expiration Date, such increased annual base salary shall become a floor below which such annual base salary shall not fall at any future time during the Term of Employment without the Executive's written consent, provided, however, that such increased base salary may be reduced (but not below the level originally in effect on the Effective Date) on a basis consistent with and concurrently with across-the-board salary reductions based on the Employers' financial performance similarly affecting all senior management personnel of the Holding Company and its affiliates. The Executive's salary shall be payable in periodic installments in accordance with the Holding Company's usual practice for its senior executives. 3.2. REGULAR BENEFITS. The Executive shall also be entitled to participate in any and all employee benefit plans, medical insurance plans, disability income plans, retirement plans, bonus incentive plans, and other benefit plans from time to time in effect for senior executives of the Holding Company. Such participation shall be subject to (i) the terms of the applicable plan documents, (ii) generally applicable policies of the Holding Company and (iii) the discretion of the Board of Directors of the Holding Company or any administrative or other committee provided for in or contemplated by such plans. 3.3. OTHER BENEFITS. (a) SERP. The Executive shall continue to be entitled to the supplemental retirement benefits provided by the Salary Continuation Agreement dated [_____] between the Bank and the Executive. 3.4. BUSINESS EXPENSES. The Holding Company shall reimburse the Executive for all reasonable travel and other business expenses incurred by the Executive in the performance of the Executive's duties and responsibilities, subject to such reasonable requirements with respect to substantiation and documentation as may be specified by the Holding Company. 2 3.5. VACATION. The Executive shall be entitled to not less than four (4) weeks of vacation per year, to be taken at such times and intervals as shall be determined by the Executive with the approval of the Holding Company, which approval shall not be unreasonably withheld. 3.6. GENERAL. Nothing paid to the Executive under any plan, policy or arrangement currently in effect or made available in the future shall be deemed to be in lieu of other compensation to the Executive as described in this Agreement. 4. EXTENT OF SERVICE. During the Term of Employment, the Executive shall, subject to the direction and supervision of the Boards of Directors of the Holding Company and the Bank, devote the Executive's full time, best efforts and business judgment, skill and knowledge to the advancement of the Employers' interests and to the discharge of the Executive's duties and responsibilities hereunder. The Executive shall not engage in any other business activity, except as may be approved by the Board of Directors of the Holding Company; provided, however, that nothing herein shall be construed as preventing the Executive from: (a) investing the Executive's assets in such form or manner as shall not require any material services on the Executive's part in the operations or affairs of the companies or the other entities in which such investments are made, provided that the Executive may not own any interest in any entity that competes with the Holding Company or any affiliate (other than up to two percent (2%) of the outstanding voting stock of such an entity that is a publicly traded entity); or (b) serving on the board of directors of any company not in competition with the Holding Company or any affiliate, provided that the Executive shall not render any material services with respect to the operations or affairs of any such company; or (c) engaging in religious, charitable or other community or non-profit activities which do not impair the Executive's ability to fulfill the Executive's duties and responsibilities under this Agreement. 5. TERMINATION UPON DEATH. In the event of the Executive's death during the Term of Employment, the Executive's employment (and the Term of Employment) shall terminate on the date of the Executive's death. The Holding Company shall pay to the Executive's beneficiary, designated in writing to the Holding Company prior to the Executive's death (or to the Executive's estate, if the Executive fails to make such designation), (i) any base salary or other compensation earned through the date of death, plus (ii) the Executive's pro rata share (based on the portion of the then-current calendar year during which the Executive was employed before the Executive's death) of the highest of the aggregate annual amounts paid to the Executive (or accrued) as bonuses or other cash incentive compensation for the three calendar years preceding the termination of employment, plus (iii) the base salary that the Executive would have earned for a period of six months following the Executive's death, plus (iv) any other compensation and benefits as may be provided in accordance with the terms and provisions of any applicable plans and programs, if any, of the Holding Company. In addition, the Holding Company shall continue in effect the medical benefits of the Executive's dependents at the level in effect on, and at the same out-of-pocket cost to the Executive as of, the date of death for a six month period commencing on the date of death (or, if such continuation is not permitted by applicable law or if 3 the Holding Company Board so determines in its sole discretion, the Holding Company shall provide the economic equivalent in lieu thereof). 6. DISCHARGE FOR SPECIALLY-DEFINED CAUSE. 6.1. NOTICE AND DETERMINATION OF SPECIALLY-DEFINED CAUSE. The Bank and the Holding Company may terminate the Executive's employment during the Term of Employment for Specially-Defined Cause. Such termination shall be deemed to have occurred for "SPECIALLY-DEFINED CAUSE" only if: (a) the Boards of Directors of each of the Holding Company and the Bank, by separate majority votes of their entire membership, determine that the Executive (i) has been convicted for the commission of a felony from which all final appeals have been taken, or (ii) has willfully and intentionally engaged in dishonest or gross misconduct in connection with the Executive's employment by the Holding Company or any affiliate thereof, in either case that results in material and demonstrable financial harm to the Holding Company or any of its affiliates. No act or failure to act on the part of the Executive shall be considered "willful" unless it is done, or omitted to be done, by the Executive in bad faith or without reasonable belief that the Executive's action or omission was in the best interests of the Holding Company or any affiliate thereof. Any act or failure to act that is based upon authority given pursuant to a resolution duly adopted by the Boards of Directors of the Holding Company and the Bank, or the advice of legal counsel for the Holding Company, shall be conclusively presumed to be done, or omitted to be done, by the Executive in good faith and in the best interests of the Holding Company or any affiliate thereof; and (b) at least forty-five (45) days prior to the votes contemplated by Section 6.1(a), the Holding Company has provided the Executive with notice of intent of the Holding Company and the Bank to discharge the Executive for Specially-Defined Cause, detailing with particularity the facts and circumstances which are alleged to constitute Specially-Defined Cause (the "NOTICE OF INTENT TO DISCHARGE"); and (c) after the giving of the Notice of Intent to Discharge and before the taking of the votes contemplated by Section 6.1(a), the Executive (together with the Executive's legal counsel, if the Executive so desires) is afforded a reasonable opportunity to make both written and oral presentations before the Boards of Directors of the Holding Company and the Bank for the purpose of refuting the alleged grounds for Specially-Defined Cause for the Executive's discharge; and (d) after the votes contemplated by Section 6.1(a), the Holding Company and the Bank have furnished to the Executive a notice of termination which shall specify the effective date of the Executive's termination of employment (which shall in no event be 4 earlier than the date on which such notice is deemed given) and include a copy of a resolution or resolutions adopted by the Boards of Directors of the Holding Company and the Bank authorizing the termination of the Executive's employment for Specially-Defined Cause and stating with particularity the facts and circumstances found to constitute Specially-Defined Cause for the Executive's discharge (the "FINAL DISCHARGE NOTICE"). 6.2. SUSPENSION; FINAL DISCHARGE. Following the giving of a Notice of Intent to Discharge, the Bank and the Holding Company may temporarily suspend the Executive's duties and authority and, in such event, may also suspend the payment of salary and other cash compensation, but not the Executive's participation in retirement, insurance and other employee benefit plans. If the Executive is discharged for Specially-Defined Cause, all payments withheld during the period of suspension shall be deemed forfeited and shall not be payable to the Executive. If the Bank and the Holding Company do not give a Final Discharge Notice to the Executive within one hundred twenty (120) days after giving a Notice of Intent to Discharge, the Notice of Intent to Discharge shall be deemed withdrawn and any future action to discharge the Executive for Specially-Defined Cause shall require the giving of a new Notice of Intent to Discharge. 6.3. TERMINATION OF OBLIGATIONS. In the event of termination pursuant to this Section 6, the Term of Employment shall terminate and the Holding Company shall pay to the Executive an amount equal to the sum of (a) base salary or other compensation earned through the date of termination, plus (b) any other compensation and benefits as may be provided in accordance with the terms and provisions of any applicable plans and programs, if any, of the Holding Company. All other obligations of the Holding Company under this Agreement shall terminate as of the date of termination. 7. TERMINATION BY THE EXECUTIVE 7.1. TERMINATION BY THE EXECUTIVE FOR GOOD REASON. (a) The Executive shall be entitled to terminate the Executive's employment hereunder for or with Good Reason (as defined in Section 7.4). Upon any such termination, the Executive shall be entitled to receive the benefits set forth in Section 9. A termination of employment by the Executive for Good Reason shall be effectuated by giving the Holding Company written notice ("NOTICE OF TERMINATION FOR GOOD REASON") of the termination, setting forth in reasonable detail the specific conduct of the Holding Company that constitutes Good Reason and the specific provision(s) of this Agreement on which the Executive relies. A termination of employment by the Executive for Good Reason shall be effective on the fifth business day following the date when the Notice of Termination for Good Reason is given, unless the notice sets forth a later date (which date shall in no event be later than 30 days after the notice is given). (b) The failure to set forth any fact or circumstance in a Notice of Termination for Good Reason shall not constitute a waiver of the right to assert, and shall not preclude the Executive from asserting, such fact or circumstance in an attempt to enforce any right under or provision of this Agreement. 5 7.2. OTHER VOLUNTARY TERMINATION BY THE EXECUTIVE. During the Term of Employment, the Executive may effect, upon sixty (60) days prior written notice to the Holding Company, a Voluntary Termination of the Executive's employment hereunder and thereupon the Term of Employment (if not already expired) shall end. A "VOLUNTARY TERMINATION" shall mean a termination of employment by the Executive on the Executive's own initiative other than (a) a termination due to death or Disability (as defined in Section 12), (b) a termination for Good Reason (as defined in Section 7.4), (c) a termination due to Retirement (as defined in Section 7.3), or (d) a termination as a result of the normal expiration of the full Term of Employment. If, during the Term of Employment, the Executive's employment is so terminated due to a Voluntary Termination, the Term of Employment shall thereupon end and the Holding Company shall pay to the Executive an amount equal to the sum of (a) base salary or other compensation earned through the date of termination, plus (b) any other compensation and benefits as may be provided in accordance with the terms and provisions of any applicable plans and programs, if any, of the Holding Company. 7.3. TERMINATION DUE TO RETIREMENT. "RETIREMENT" shall mean the termination of the Executive's employment with the Holding Company for any reason by the Executive at any time after the Executive attains "Retirement Age" (as hereinafter defined). "RETIREMENT AGE" shall mean the earlier to occur of (x) age 65 and (y) an age of 60 or greater at which the Holding Company, by vote of the Board of Directors, permits the Executive to retire. The Executive may terminate the Executive's employment hereunder due to Retirement upon thirty (30) days prior written notice to the Holding Company. If, during the Term of Employment, the Executive's employment is so terminated due to Retirement, the Term of Employment shall thereupon end and the Executive shall be entitled to (i) continuation of the medical benefits of the Executive and Executive's dependents at the level in effect on, and at the same out-of-pocket cost to the Executive as of, the date of termination for the one-year period following the termination of the Executive's employment due to Retirement (or, if such continuation is not permitted by applicable law or if the Board of the Holding Company so determines in its sole discretion, the Holding Company shall provide the economic equivalent in lieu thereof), and (ii) any other compensation and benefits as may be provided in accordance with the terms and provisions of any applicable plans and programs, if any, of the Holding Company. 7.4. GOOD REASON. For purposes of this Agreement, the term "GOOD REASON" shall mean any of the following: (a) the failure of the Board of Directors of the Holding Company to elect the Executive to the offices of Executive Vice President and Chief Financial Officer, or to continue the Executive in such offices; (b) the failure of the Board of Directors of the Bank to elect the Executive to the offices of Executive Vice President and Chief Financial Officer, or to continue the Executive in such offices; (c) the failure by either Employer to comply with the provisions of Section 3.1; (d) any action by either Employer which results in a significant diminution in the Executive's responsibilities, authorities, powers, functions or duties; 6 (e) a material breach by either Employer of any of the provisions of this Agreement which failure or breach shall have continued for thirty (30) days after written notice from the Executive to the Holding Company specifying the nature of such failure or breach; and (f) a determination by the Board of either Employer not to continue to extend the term of this Agreement as provided in Section 2. In addition, "Good Reason" shall include the following events but only if they shall occur within two years following a "Change in Control" (as defined in Section 7.5): (g) a change in the Executive's principal place of employment to a place that is not the principal executive office of the Holding Company, or a relocation of the Holding Company's principal executive office to a location that increases the Executive's commute from the Executive's principal residence to the Holding Company's principal executive office by more than ten (10) miles; (h) the failure by either Employer to continue to provide the Executive with benefits substantially similar to those available to the Executive under any of the life insurance, medical, health and accident, or disability plans or any other material benefit plans in which the Executive was participating at the time of the Change in Control, or the taking of any action by either Employer which would directly or indirectly materially reduce any of such benefits, or the failure by either Employer to provide the Executive with the number of paid vacation days to which the Executive is entitled on the basis of years of service with the Employers in accordance with the Employers; normal vacation policy in effect at the time of the Change in Control; (i) a reasonable determination by the Executive that, as a result of a Change in Control, the Executive is unable to exercise the responsibilities, authorities, powers, functions or duties exercised by the Executive immediately prior to such Change in Control; (j) a reasonable determination by the Executive that, as a result of a Change in Control, the Executive's working conditions have significantly worsened; and (k) the failure of the Holding Company to obtain a satisfactory agreement from any successor to assume and agree to perform this Agreement. 7.5. CHANGE IN CONTROL. A "Change in Control" shall be deemed to have occurred in any of the following events: (a) If there has occurred a change in control which the Holding Company would be required to report in response to Item 5.01 of Form 8-K promulgated under the Securities Exchange Act of 1934, as amended (the "1934 ACT"), or, if such regulation is no longer in effect, any regulations promulgated by the Securities and Exchange Commission pursuant to the 1934 Act which are intended to serve similar purposes; 7 (b) When any "person" (as such term is used in Sections 13(d) and 14(d)(2) of the 1934 Act) becomes a "beneficial owner" (as such term is defined in Rule 13d-3 promulgated under the 1934 Act), directly or indirectly, of securities of the Holding Company or the Bank representing twenty-five percent (25%) or more of the total number of votes that may be cast for the election of directors of the Holding Company or the Bank, as the case may be; (c) During any period of two consecutive years, individuals who at the beginning of such period constitute the Board of Directors of the Holding Company, and any new director (other than a director designated by a person who has entered into an agreement with the Holding Company to effect a transaction described in Subsection (b), (d) or (e) of this Section 7.5) whose election by the Board or nomination for election by the Holding Company's stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute at least a majority of the Board of Directors of the Holding Company; (d) The stockholders of the Holding Company approve a merger, share exchange or consolidation ("MERGER OR CONSOLIDATION") of the Holding Company with any other corporation, other than (a) a merger or consolidation which would result in the voting securities of the Holding Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 70% of the combined voting power of the voting securities of the Holding Company or such surviving entity outstanding immediately after such merger or consolidation or (b) a merger or consolidation effected to implement a recapitalization of the Holding Company (or similar transaction) in which no "person" (as hereinabove defined) acquires more than 30% of the combined voting power of the Holding Company's then outstanding securities; or (e) The stockholders of the Holding Company or the Bank approve a plan of complete liquidation of the Holding Company or the Bank or an agreement for the sale or disposition by the Holding Company or the Bank of all or substantially all of the Holding Company's or the Bank's assets. 8. TERMINATION BY EITHER EMPLOYER WITHOUT SPECIALLY-DEFINED CAUSE. The Executive's employment with the Holding Company may be terminated without Specially-Defined Cause by the Board of Directors of either Employer, provided, however, that the Holding Company shall have the obligation upon any such termination to make the payments to the Executive provided for under Section 9 of this Agreement. 9. CERTAIN TERMINATION BENEFITS. In the event of termination pursuant to Section 7.1 or 8, the Executive shall be entitled to each of the following benefits: 9.1. EARNINGS TO DATE OF TERMINATION. An amount equal to the sum of (a) base salary or other compensation earned through the date of termination, plus (b) the Executive's pro rata share (based on the portion of the then-current calendar year during which the Executive was employed before termination of the Executive's employment) of the highest of the aggregate 8 annual amounts paid to the Executive (or accrued) as bonuses or other cash incentive compensation for the three calendar years preceding the termination of employment, plus (c) any other compensation and benefits as may be provided in accordance with the terms and provisions of any applicable plans and programs, if any, of the Holding Company. 9.2. LUMP SUM PAYMENT. A lump sum severance benefit equal to three times the Executive's Highest Yearly Compensation. "HIGHEST YEARLY COMPENSATION" shall be the highest Total Compensation of the Executive during the three calendar years preceding the termination of employment. "TOTAL COMPENSATION" for each year shall be the aggregate of (i) all base salary paid for such year; (ii) any bonuses or other cash incentive compensation paid during such year; (iii) any amount which is contributed by the Employers on the Executive's behalf pursuant to a salary reduction agreement and which is not included in the Executive's gross income under Sections 125, 132(f) or 402(e)(3) of the Internal Revenue Code of 1986, as amended; (iv) any amounts earned but deferred with respect to such calendar year, and (v) any other amounts reported on the Executive's Form W-2 (Wages, tips, other compensation box) for such year. The lump sum payment shall be payable to the Executive in one lump-sum on the date of termination of employment. 9.3. BENEFIT CONTINUATION. Continuation of the disability and medical benefits described in Section 3.2 existing on the date of termination at the level in effect on, and at the same out-of-pocket cost to the Executive as of, the date of termination for a period of three years following the Executive's date of termination of employment. 9.4. PENSION ADJUSTMENT. An amount equal to the excess of (a) the actuarial value of the benefits which the Executive would have accrued under each of the Holding Company's qualified and non-qualified pension plans in which the Executive was a participant as of the date of termination of employment if (i) the Executive's employment had continued at the Executive's level of total compensation (determined as of the date of termination of employment) for a period of three years following the Executive's date of termination of employment and (ii) each such plan had remained in effect during such three-year period, over (b) the actuarial value of the Executive's actual benefits under such qualified and non-qualified pension plans. The actuarial value of such benefits shall be determined by the Compensation Committee of the Holding Company in its reasonable discretion. 9.5. VESTING OF STOCK AWARDS AND OPTIONS. There shall be an acceleration of all vesting provisions, so that as of the date of termination of the Executive's employment, all stock awards made by the Holding Company to the Executive, to the extent then unvested or forfeitable, shall become immediately and fully vested and non-forfeitable, and all options to purchase Common Stock of the Holding Company, to the extent then not exercisable, shall become immediately and fully exercisable. 10. ADJUSTMENT FOR UNAVAILABILITY OF BENEFITS. If, in spite of the provisions of this Agreement, benefits or service credits under any benefit plan provided by a third party shall not be payable or provided under any such plan to the Executive, or to the Executive's dependents, beneficiaries or estate, because the Executive is no longer deemed to be an employee of the Holding Company or the Bank, the Holding Company shall pay or provide for payment of such 9 benefits and service credits for such benefits to the Executive, or to the Executive's dependents, beneficiaries or estate. 11. DEATH OR DISABILITY BEFORE COMPLETION OF CHANGE IN CONTROL. 11.1. CERTAIN PAYMENTS. The Executive shall be entitled to receive payments provided for under Section 9 of this Agreement that would have been payable if the Executive had resigned with Good Reason on the date of the Executive's termination of employment if (a) the Executive's employment terminates due to Disability pursuant to Section 12 or due to death, and (b) either (i) such termination of employment occurred within one (1) year after the occurrence of a Change in Control; or (ii) such termination occurred within one (1) year after the occurrence of a Preliminary Change in Control (as hereinafter defined), AND, in addition, a Change in Control occurs within two (2) years after such termination of employment. 11.2. PRELIMINARY CHANGE IN CONTROL. "PRELIMINARY CHANGE IN CONTROL" shall mean each of (i) the signing of a definitive agreement for a transaction that, if consummated, would result in a Change in Control, (ii) the commencement of a tender offer that, if successful, would result in a Change in Control, and (iii) the circulation of a proxy statement seeking proxies in opposition to management in an election contest that, if successful, would result in a Change in Control. Any payment required to be made pursuant to this Section 11 shall be deferred without interest until, and shall be payable immediately upon, the actual occurrence of a Change in Control. Payments to be made pursuant to this Section 11 shall be in lieu of and in substitution for payments required to be made in connection with death or disability pursuant to Section 5 or Section 12. 12. DISABILITY. 12.1. TERMINATION DUE TO DISABILITY. Either Employer may terminate the Executive's employment upon a determination, by vote of a majority of the members of its Board of Directors, acting in reliance on the written advice of a medical professional acceptable to the Board, that the Executive is suffering from a physical or mental impairment which, at the date of the determination, has prevented the Executive from performing the Executive's assigned duties on a substantially full-time basis for a period of at least one hundred and eighty (180) days during the period of one (1) year ending with the date of the determination or is likely to result in death or prevent the Executive from performing the Executive's assigned duties on a substantially full-time basis for a period of at least one hundred and eighty (180) days during the period of one (1) year beginning with the date of the determination (such impairment, the "DISABILITY"). In such event: (a) The Holding Company shall pay and deliver to the Executive an amount equal to the sum of (x) base salary or other compensation earned through the date of 10 termination, plus (y) any other compensation and benefits as may be provided in accordance with the terms and provisions of any applicable plans and programs, if any, of the Holding Company. (b) In addition to the amounts payable pursuant to Section 12.1(a), the Holding Company shall continue to pay the Executive the Executive's base salary, at the annual rate in effect for the Executive immediately prior to the termination of the Executive's employment, during the "Initial Continuation Period." The "INITIAL CONTINUATION PERIOD" shall commence on the date of termination of employment pursuant to Section 12.1 and shall end on the earliest of: (i) the expiration of one hundred and eighty (180) days after the date of termination of the Executive's employment; (ii) the date on which long-term disability insurance benefits are first payable to the Executive under any long-term disability insurance plan ("LTD PLAN") covering employees of the Bank or the Holding Company (the "LTD ELIGIBILITY DATE"); (iii) the date of the Executive's death; and (iv) the Expiration Date. If the end of the Initial Continuation Period is neither the LTD Eligibility Date nor the date of the Executive's death, the Holding Company shall continue to pay the Executive the Executive's base salary, at an annual rate equal to sixty percent (60%) of the annual rate in effect for the Executive immediately prior to the termination of the Executive's employment (the "60% AMOUNT"), during an additional period ending on the earliest of the LTD Eligibility Date, the date of the Executive's death and the Expiration Date. While receiving disability payments under such LTD Plan, the Holding Company shall pay to the Executive an additional payment of such an amount, if any, as may be necessary so that the aggregate of such additional payment and the Executive's disability income payments will equal the 60% Amount, and the Executive shall continue to participate in the Employers' benefit plans and to receive other benefits as specified in Section 3.2 until the Expiration Date, with all such benefits to be at the level in effect on, and at the same out-of-pocket cost to the Executive as of, the date of Disability. 12.2. EFFECTIVE DATE OF TERMINATION. A termination of employment due to Disability under this Section 12 shall be effected by notice of termination given to the Executive by the applicable Employer and shall take effect on the later of the effective date of termination specified in such notice or the date on which the notice of termination is deemed given to the Executive. A termination of employment by either Employer due to Disability under this Section 12 shall be effective to terminate the Executive's employment with each of the Bank and the Holding Company. 13. EXCISE TAXES. 13.1. COVERED BENEFITS. "COVERED BENEFITS" shall mean any benefit or payment from the Holding Company or any affiliate or any successor in interest to any of the foregoing that will be (or in the opinion of Tax Counsel (as defined below) might reasonably be expected to be) subject to any excise tax (the "EXCISE TAX") imposed under Section 4999 of the Internal Revenue Code of 1986, as amended (the "CODE"). In the event that at any time during or after the Term of Employment the Executive shall receive any Covered Benefits, the Holding Company shall pay to the Executive an additional amount (the "GROSS-UP PAYMENT") such that the net amount retained by the Executive from the Gross-Up Payment, after deduction of any 11 federal, state and local income taxes, Excise Tax, and FICA and Medicare withholding taxes on the Gross-Up Payment, shall be equal to the Excise Tax on the Covered Benefits. For purposes of determining the amount of such Excise Tax on the Covered Benefits, the amount of the Covered Benefits that shall be taken into account in calculating the Excise Tax shall be equal to (i) the Covered Benefits, minus (ii) the amount of such Covered Benefits that, in the opinion of tax counsel selected by the Holding Company and reasonably acceptable to the Executive ("TAX COUNSEL"), are not parachute payments (within the meaning of Section 280G(b)(1) of the Code). 13.2. CERTAIN ASSUMPTIONS. For purposes of this Section 13, the Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation in the calendar year in which the Excise Tax is payable and state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive's residence on the effective date of the Executive's termination, net of the reduction in federal income taxes which could be obtained from deduction of such state and local taxes. Except as otherwise provided herein, all determinations required to be made under this Section 13 shall be made by Tax Counsel, which determinations shall be conclusive and binding on the Executive and the Employers, absent manifest error. 13.3. TAX INDEMNIFICATION. The Holding Company shall indemnify and hold the Executive harmless from any and all losses, costs and expenses (including without limitation, reasonable attorney's fees, reasonable accountant's fees, interest, fines and penalties of any kind) which the Executive incurs as a result of any administrative or judicial review of the Executive's liability under Section 4999 of the Code by the Internal Revenue Service or any comparable state agency through and including a final judicial determination or final administrative settlement of any dispute arising out of the Executive's liability for the Excise Tax or otherwise relating to the classification for purposes of Section 280G of the Code of any of the Covered Benefits or other payment or benefit in the nature of compensation made or provided to the Executive by the Holding Company. The Executive shall promptly notify the Holding Company in writing whenever the Executive receives notice of the commencement of any judicial or administrative proceeding, formal or informal, in which the federal tax treatment under Section 4999 of the Code of any amount paid or payable under this Agreement or otherwise is being reviewed or is in dispute (including a notice of audit or other inquiry concerning the reporting of the Executive's liability under Section 4999). The Holding Company may assume control at its expense over all legal and accounting matters pertaining to such federal or state tax treatment (except to the extent necessary or appropriate for the Executive to resolve any such proceeding with respect to any matter unrelated to the Covered Benefits or other payment or benefit in the nature of compensation made or provided to the Executive by the Holding Company) and the Executive shall cooperate fully with the Holding Company in any such proceeding. The Executive shall not enter into any compromise or settlement or otherwise prejudice any rights the Holding Company may have in connection therewith without prior consent of the Holding Company. In the event that the Holding Company elects not to assume control over such matters, the Holding Company shall promptly reimburse the Executive for all expenses related thereto as and when incurred upon presentation of appropriate documentation relating thereto. 14. CONFIDENTIAL INFORMATION. The Executive will not disclose to any other Person (as defined in Section 18.2) (except as required by applicable law or in connection with the performance of the Executive's duties and responsibilities hereunder), or use for the Executive's 12 own benefit or gain, any confidential information of the Holding Company or any affiliate obtained by the Executive incident to the Executive's employment with the Holding Company or the Bank. The term "CONFIDENTIAL INFORMATION" includes, without limitation, financial information, business plans, prospects and opportunities (such as lending relationships, financial product developments, or possible acquisitions or dispositions of business or facilities) which have been discussed or considered by the management of the Holding Company or the Bank but does not include any information which has become part of the public domain by means other than the Executive's nonobservance of the Executive's obligations hereunder. 15. NO MITIGATION; NO OFFSET. In the event of any termination of employment under this Agreement, the Executive shall be under no obligation to seek other employment or to mitigate damages, and there shall be no offset against any amounts due to the Executive under this Agreement for any reason, including, without limitation, on account of any remuneration attributable to any subsequent employment that the Executive may obtain. Any amounts due under this Agreement are in the nature of severance payments or liquidated damages, or both, and are not in the nature of a penalty. 16. INDEMNIFICATION AND INSURANCE. 16.1. INDEMNIFICATION. To the maximum extent permitted under applicable law, during the Term of Employment and for a period of six years thereafter, the Holding Company shall indemnify the Executive against and hold the Executive harmless from any costs, liabilities, losses and exposures to the fullest extent and on the most favorable terms and conditions that similar indemnification is offered to any director or officer of the Holding Company or any affiliate thereof. 16.2. INSURANCE. During the Term of Employment and for a period of six years thereafter, the Holding Company shall cause the Executive to be covered by and named as an insured under any policy or contract of insurance obtained by either Employer to insure directors and officers against personal liability for acts or omissions in connection with service as an officer or director of the Holding Company or the Bank or service in other capacities at its request. The coverage provided to the Executive pursuant to this Section 16 shall be of the same scope and on the same terms and conditions as the coverage (if any) provided to other officers or directors of the Holding Company. 17. NON-COMPETITION; NON-SOLICITATION. For purposes of this Section 17, the term "EMPLOYER" shall include not only each of the Holding Company and the Bank but also every other affiliate of the Holding Company. 17.1. WHILE EMPLOYED. During such time as the Executive is employed hereunder, the Executive will not compete with the banking or any other business conducted by any Employer during the period of the Executive's employment hereunder, nor will the Executive attempt to hire any employee of any Employer, assist in such hiring by any other Person, encourage any such employee to terminate his or her relationship with any Employer, or interfere with or damage (or attempt to interfere with or damage) any relationship between any Employer and any customers of any Employer or solicit or encourage any customer of any Employer to 13 terminate its relationship with any Employer or to conduct with any other person any business or activity which such customer conducts or could conduct with any Employer. 17.2. POST-EMPLOYMENT. The provisions of this Section 17.2 shall not be binding on the Executive (and shall become of no further force or effect) after a Change in Control shall have occurred. The Executive agrees that during the one-year period following termination of the Executive's Employment for any reason (the "NONCOMPETITION PERIOD"), the Executive will not, directly or indirectly, (i) become a director, officer, employee, principal, agent, consultant or independent contractor of any insured depository institution, trust company or parent holding company of any such institution or company which has an office in any city or town in which the Bank maintains an office (a "COMPETING BUSINESS"), provided, however, that this provision shall not prohibit the Executive from (x) owning bonds, non-voting preferred stock or up to five percent (5%) of the outstanding common stock of any such entity if such common stock is publicly traded and (y) being employed by a Competing Business outside of such cities and towns so long as the Executive is in compliance with the provisions of the remainder of this Section 17.2. During the Noncompetition Period, the Executive will not, directly or indirectly, (i) solicit or encourage any person who was employed by any Employer on the date of termination of the Executive's employment to leave his or her employment at any Employer, or (ii) encourage or assist any person with whom the Executive has an employment or consulting or other similar relationship in identifying, recruiting or soliciting any commercial loan officer or relationship manager who was employed by any Employer on the date of termination of the Executive's employment ("TERMINATION DATE"), or (iii) assist such person in formulating an employment package for such officer or manager to the extent such assistance involves the use of confidential information (as that term is defined in Section 14). The provisions of this Section 17.2 shall not be construed to prohibit any person who employs the Executive as an employee or consultant from advertising generally for employees in the markets served by any Employer or from hiring any candidate, whether or not such person was employed by an Employer, so long as the Executive does not breach the covenants set forth in this Section 17.2. During the Noncompetition Period, the Executive will not, directly or indirectly, solicit or encourage or assist others to solicit any business from any person or entity which, together with its affiliates, had commercial loans outstanding from the Bank which in the aggregate amounted to $1,000,000 or more at any time within the six-month period prior to the Termination Date ("COMMERCIAL LOAN CUSTOMERS"). This Section 17.2 shall not be construed to prohibit any of the Executive's future employers from making general public announcements to the effect that the Executive has become affiliated with such new employer or holding receptions to introduce the Executive to persons other than Commercial Loan Customers. The Executive agrees to inform any potential new employer of the covenant set forth in this Section 17.2 prior to accepting employment during the Noncompetition Period. 18. MISCELLANEOUS. 18.1. CONFLICTING AGREEMENTS. The Executive hereby represents and warrants that the execution of this Agreement and the performance of the Executive's obligations hereunder will not breach or be in conflict with any other agreement to which the Executive is a party or is bound, and that the Executive is not now subject to any covenants against competition or similar covenants which would affect the performance of the Executive's obligations hereunder. 14 18.2. DEFINITION OF "PERSON". For purposes of this Agreement, the term "PERSON" shall mean an individual, a corporation, an association, a partnership, an estate, a trust and any other entity or organization. 18.3. WITHHOLDING. All payments made under this Agreement shall be net of any tax or other amounts required to be withheld under applicable law. 18.4. ARBITRATION OF DISPUTES. Any controversy or claim arising out of or relating to this Agreement or the breach thereof shall be settled by arbitration in accordance with the laws of The Commonwealth of Massachusetts by three arbitrators, one of whom shall be appointed by the Holding Company, one by the Executive and the third by the first two arbitrators. If the first two arbitrators cannot agree on the appointment of a third arbitrator, then the third arbitrator shall be appointed by the American Arbitration Association in the City of Boston. Such arbitration shall be conducted in the City of Boston in accordance with the rules of the American Arbitration Association, except with respect to the selection of arbitrators which shall be as provided in this Section 18.4. Judgment upon the award rendered by the arbitrators may be entered in any court having jurisdiction thereof. 18.5. INDEMNIFICATION FOR ATTORNEYS' FEES. The Holding Company shall indemnify, hold harmless and defend the Executive against reasonable costs, including legal fees and expenses (collectively, "EXPENSES"), incurred by the Executive in connection with or arising out of any action, suit, proceeding (including any tax controversy) or contest in which the Executive may be involved, as a result of the Executive's efforts, in good faith, to defend or enforce the terms of this Agreement. For purposes of this Agreement, any settlement agreement which provides for payment of any amounts in settlement of the Holding Company's or the Bank's obligations hereunder shall be conclusive evidence of the Executive's entitlement to indemnification hereunder, and any such indemnification payments shall be in addition to amounts payable pursuant to such settlement agreement, unless such settlement agreement expressly provides otherwise. Unless it is determined that under the circumstances recovery by the Executive of all or a part of any such Expenses would be unjust, the Holding Company shall pay as incurred, to the full extent permitted by law, all Expenses that the Executive may reasonably incur as a result of or in connection with the Executive's consultation with legal counsel or arising out of any action, suit, proceeding, tax controversy or contest (regardless of the outcome thereof) by the Holding Company, the Executive or others regarding the validity or enforceability of, or liability under, any provision of this Agreement or any guarantee of performance thereof (including as a result of any contest by the Executive about the amount of any payment pursuant to this Agreement), plus in each case interest on any delayed payment at the applicable federal rate provided for in Section 7872(f)(2)(A) of the Code. This Section 18.5 shall apply whether such consultation, action, suit, proceeding, tax controversy or contest arises before, on, after or as a result of a Change of Control and shall continue in effect notwithstanding the termination or expiration of this Agreement or the Term of Employment. 18.6. INTERPRETATION. The recitals hereto constitute an integral part of this Agreement. References to Sections include subsections, which are part of the related Section (e.g., a section numbered "Section 5.5" would be part of "Section 5" and references to "Section 5" would also refer to material contained in the subsection described as "Section 5.5"). 15 18.7. ASSIGNMENT; SUCCESSORS AND ASSIGNS, ETC. (a) This Agreement is personal to the Executive and, without the prior written consent of the Holding Company, shall not be assignable by the Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive's legal representatives. (b) This Agreement shall inure to the benefit of and be binding upon the Holding Company and its successors and permitted assigns. (c) The Holding Company may not assign this Agreement or any interest herein without the prior written consent of the Executive and without such consent any attempted transfer or assignment shall be null and of no effect; provided, however, that the Holding Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Holding Company expressly to assume and to agree to perform this Agreement in the same manner and to the same extent that the Holding Company would have been required to perform it if no such succession had taken place. As used in this Agreement, "the Holding Company" shall mean both the Holding Company as defined above and any such successor that assumes and agrees to perform this Agreement, by operation of law or otherwise. 18.8. ENFORCEABILITY. If any portion or provision of this Agreement shall to any extent be declared illegal or unenforceable by a court of competent jurisdiction, then the remainder of this Agreement, or the application of such portion or provision in circumstances other than those as to which it is so declared illegal or unenforceable, shall not be affected thereby, and each portion and provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law. 18.9. REDUCTIONS. Notwithstanding anything to the contrary contained in this Agreement, any and all payments and benefits to be provided to the Executive hereunder are subject to reduction to the extent required by applicable statutes, regulations, rules and directives of federal, state and other governmental and regulatory bodies having jurisdiction over the Bank or the Holding Company. The Executive confirms that the Executive is aware of the fact that the Federal Deposit Insurance Corporation has the power to preclude the Bank from making payments to the Executive under this Agreement under certain circumstances. The Executive agrees that neither the Bank nor the Holding Company shall be deemed to be in breach of this Agreement if it is precluded from making a payment otherwise payable hereunder by reason of regulatory requirements binding on the Bank or the Holding Company, as the case may be. 18.10. WAIVER. No waiver of any provision hereof shall be effective unless made in writing and signed by the waiving party. The failure of any party to require the performance of any term or obligation of this Agreement, or the waiver by any party of any breach of this Agreement, shall not prevent any subsequent enforcement of such term or obligation or be deemed a waiver of any subsequent breach. 16 18.11. NOTICES. Any notices, requests, demands and other communications provided for by this Agreement shall be sufficient if in writing and delivered in person or sent by registered or certified mail, postage prepaid, and addressed to the Executive at the Executive's last known address on the books of the Holding Company or, in the case of the Holding Company, at its main office, attention of the Chief Executive Officer. 18.12. ELECTION OF REMEDIES. An election by the Executive to resign for Good Reason under the provisions of this Agreement shall not constitute a breach by the Executive of any agreement the Executive may have with the Holding Company and shall not be deemed a voluntary termination of employment by the Executive for the purpose of interpreting the provisions of any of the Holding Company's benefit plans, programs or policies. 18.13. AMENDMENT. This Agreement may be amended or modified only by a written instrument signed by the Executive and by a duly authorized representative of the Holding Company. 18.14. NO EFFECT ON LENGTH OF SERVICE. Nothing in this Agreement shall be deemed to prohibit the Holding Company or the Bank from terminating the Executive's employment before the end of the Term of Employment with or without notice for any reason. This Agreement shall determine the relative rights and obligations of the Bank, the Holding Company and the Executive in the event of any such termination. In addition, nothing in this Agreement shall require the termination of the Executive's employment at the expiration of the Term of Employment. Any continuation of the Executive's employment beyond the expiration of the Term of Employment shall be on an "at-will" basis unless the Bank, the Holding Company and the Executive agree otherwise. 18.15. ALLOCATION OF OBLIGATIONS AS BETWEEN THE BANK AND THE HOLDING COMPANY. The parties understand that the Executive will perform substantial services for the Holding Company, the Bank, and other affiliates of the Holding Company. Unless otherwise determined by the Board of Directors of the Holding Company, the Executive shall not be entitled to compensation in addition to the compensation set forth in Section 3 of this Agreement as a result of the Executive's serving as an officer of any affiliate of the Holding Company. The Bank and the Holding Company shall apportion between them the amounts to be paid under this Agreement, based upon the services rendered by the Executive to each of the Bank and the Holding Company, respectively. Any entitlement of the Executive to severance compensation or other termination benefits under this Agreement shall be determined on the basis of the aggregate compensation payable to the Executive by the Bank and the Holding Company, and liability therefor shall be apportioned between the Bank and the Holding Company in the same manner as compensation paid to the Executive for services to each of them. It is the intent and purpose of this Section 18.15 that the Executive have the same legal and economic rights that the Executive would have if all of the Executive's services were rendered to and all of the Executive's compensation were paid by the Holding Company. 18.16. PAYMENTS TO ESTATE OR BENEFICIARIES. In the event of the Executive's death prior to the completion by the Holding Company of all payments due the Executive under this Agreement, the Holding Company shall continue such payments (other than payments which by their terms cease upon death) to the Executive's beneficiary designated in writing to the Holding 17 Company prior to the Executive's death (or to the Executive's estate, if the Executive fails to make such designation) and, as applicable, to the Executive's surviving dependents. 18.17. ENTIRE AGREEMENT; EFFECT ON PRIOR AGREEMENTS. This Agreement constitutes the entire agreement between the parties pertaining to its subject matter and supersedes all prior and contemporaneous agreements, understandings, negotiations, prior draft agreements, and discussions of the parties, whether oral or written. 18.18. COUNTERPARTS AND FACSIMILE SIGNATURES. This Agreement may be executed in two or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each party and delivered to the other party, it being understood that all parties need not sign the same counterpart. This Agreement may be executed by facsimile signatures. 18.19. GOVERNING LAW. This is a Massachusetts contract and shall be construed under and be governed in all respects by the laws of The Commonwealth of Massachusetts without giving effect to its principles of conflicts of laws. * * * * * * 18 IN WITNESS WHEREOF, this Agreement has been executed as a sealed instrument by the Holding Company, by its duly authorized officer, and by the Executive, as of the date first above written. ATTEST: BENJAMIN FRANKLIN BANCORP, INC. ________________________________ By:______________________________ Title:___________________________ [Seal] WITNESS EXECUTIVE ________________________________ _________________________________ Claire S. Bean The undersigned hereby unconditionally guarantees the obligations of the Holding Company under the foregoing Agreement. BENJAMIN FRANKLIN BANK By:_____________________________ Title:__________________________ 19 EX-10.1.3 11 b52576bfexv10w1w3.txt EX-10.1.3 FORM OF EMPLOYMENT AGREEMENT WITH STEPHEN F. BANKS EXHIBIT 10.1.3 EMPLOYMENT AGREEMENT BETWEEN BENJAMIN FRANKLIN BANCORP, INC. AND STEPHEN F. BANKS TABLE OF CONTENTS 1. EMPLOYMENT..................................................................... 1 2. EFFECTIVE DATE AND TERM........................................................ 1 3. COMPENSATION AND BENEFITS...................................................... 2 3.1. SALARY.................................................................... 2 3.2. REGULAR BENEFITS.......................................................... 2 3.3. OTHER BENEFITS............................................................ 2 3.4. BUSINESS EXPENSES......................................................... 2 3.5. VACATION.................................................................. 2 3.6. GENERAL................................................................... 3 4. EXTENT OF SERVICE.............................................................. 3 5. TERMINATION UPON DEATH......................................................... 3 6. DISCHARGE FOR SPECIALLY-DEFINED CAUSE.......................................... 3 6.1. NOTICE AND DETERMINATION OF SPECIALLY-DEFINED CAUSE....................... 4 6.2. SUSPENSION; FINAL DISCHARGE............................................... 5 6.3. TERMINATION OF OBLIGATIONS................................................ 5 7. TERMINATION BY THE EXECUTIVE................................................... 5 7.1. TERMINATION BY THE EXECUTIVE FOR GOOD REASON.............................. 5 7.2. OTHER VOLUNTARY TERMINATION BY THE EXECUTIVE.............................. 5 7.3. TERMINATION DUE TO RETIREMENT............................................. 6 7.4. GOOD REASON............................................................... 6 7.5. CHANGE IN CONTROL......................................................... 7 8. TERMINATION BY EITHER EMPLOYER WITHOUT SPECIALLY-DEFINED CAUSE................. 8 9. CERTAIN TERMINATION BENEFITS................................................... 8 9.1. EARNINGS TO DATE OF TERMINATION........................................... 8 9.2. LUMP SUM PAYMENT.......................................................... 8 9.3. BENEFIT CONTINUATION...................................................... 9 9.4. PENSION ADJUSTMENT........................................................ 9 9.5. VESTING OF STOCK AWARDS AND OPTIONS....................................... 9 10. ADJUSTMENT FOR UNAVAILABILITY OF BENEFITS..................................... 9 11. DISABILITY.................................................................... 9 11.1. TERMINATION DUE TO DISABILITY............................................ 9 11.2. EFFECTIVE DATE OF TERMINATION............................................ 10 12. LIMITATION ON BENEFITS........................................................ 10 13. CONFIDENTIAL INFORMATION...................................................... 11
-i- 14. NO MITIGATION; NO OFFSET...................................................... 11 15. NON-COMPETITION; NON-SOLICITATION............................................. 11 15.1. WHILE EMPLOYED........................................................... 11 15.2. POST-EMPLOYMENT.......................................................... 12 16. MISCELLANEOUS................................................................. 12 16.1. CONFLICTING AGREEMENTS................................................... 12 16.2. DEFINITION OF "PERSON"................................................... 13 16.3. WITHHOLDING.............................................................. 13 16.4. ARBITRATION OF DISPUTES.................................................. 13 16.5. INDEMNIFICATION FOR ATTORNEYS' FEES...................................... 13 16.6. INTERPRETATION........................................................... 13 16.7. ASSIGNMENT; SUCCESSORS AND ASSIGNS, ETC.................................. 14 16.8. ENFORCEABILITY........................................................... 14 16.9. REDUCTIONS............................................................... 14 16.10. WAIVER.................................................................. 14 16.11. NOTICES................................................................. 14 16.12. ELECTION OF REMEDIES.................................................... 15 16.13. AMENDMENT............................................................... 15 16.14. NO EFFECT ON LENGTH OF SERVICE.......................................... 15 16.15. ALLOCATION OF OBLIGATIONS AS BETWEEN THE BANK AND THE HOLDING COMPANY... 15 16.16. PAYMENTS TO ESTATE OR BENEFICIARIES..................................... 15 16.17. ENTIRE AGREEMENT; EFFECT ON PRIOR AGREEMENTS............................ 16 16.18. COUNTERPARTS AND FACSIMILE SIGNATURES................................... 16 16.19. GOVERNING LAW........................................................... 16
-ii- EMPLOYMENT AGREEMENT Agreement made as of the [______], 2005 (this "AGREEMENT"), by and between Benjamin Franklin Bancorp, Inc., a Massachusetts corporation (the "HOLDING COMPANY") and Stephen F. Banks of [_____], Massachusetts (the "EXECUTIVE"). The Holding Company is the parent company of Benjamin Franklin Bank, a Massachusetts chartered savings bank with its executive offices in Franklin, Massachusetts (the "BANK") (the Bank and the Holding Company shall be hereinafter individually and collectively referred to as the "EMPLOYERS"). WITNESSETH WHEREAS, the Employers desire to continue to provide for the Executive's employment by the Holding Company and the Bank; NOW THEREFORE, in consideration of the mutual covenants contained herein, the Holding Company and the Executive agree as follows: 1. EMPLOYMENT. The Executive shall serve the Holding Company and Bank as Executive Vice President. In such position, the Executive shall have the duties, responsibilities and authorities determined and designated from time to time by the Chief Executive Officer. Notwithstanding the above, the Executive shall not be required to perform any duties and responsibilities (a) which would result in a noncompliance with or violation of any applicable law or regulation or (b) on a regular basis in any locations outside the counties in which the Bank now has branch offices, unless agreed upon by the Executive. 2. EFFECTIVE DATE AND TERM. The Employers agree to employ the Executive during an initial period of three (3) years beginning on the date first above written (the "EFFECTIVE DATE") and ending on the day before the third (3rd) anniversary of the Effective Date, and during the period of any additional extensions described below in this Section 2 (the "TERM OF EMPLOYMENT"). The parties intend that, at any point in time during the Executive's employment hereunder, the then-remaining Term of Employment shall be three years. On the day after the Effective Date and on each day thereafter, the Term of Employment shall be extended by one day, such that on any date the Term of Employment will expire on the day before the third (3rd) anniversary of such date. These extensions shall continue in perpetuity until discontinued by: (i) notice to the Executive given by either Employer that it has elected to discontinue the extensions; (ii) notice by the Executive to either Employer that the Executive has elected to discontinue the extensions; or (iii) termination of the Executive's employment with either Employer, whether by resignation, Disability (as provided in Section 11.1), discharge or otherwise. On the earlier of (i) the date on which such a notice is deemed given or (ii) the effective date of a termination of the Executive's employment with the Employers, the Term of Employment shall be converted to a fixed period of three (3) years ending on the day before the third (3rd) anniversary of such date (provided, however, that the Term of Employment shall terminate on such earlier date as may be specifically provided in this Agreement in the event of the Executive's death, Retirement, Voluntary Termination or termination for Specially-Defined Cause). The last day of such term, as so extended from time to time, is herein sometimes referred to as the "EXPIRATION DATE". At least once in each calendar year the Holding Company Board will review this Agreement and the Executive's performance for purposes of determining whether to continue to extend the Agreement and the rationale and results thereof shall be included in the minutes of such Board's meeting. The Board shall give notice to the Executive reasonably promptly after such review if it has decided to discontinue extending the Term of Employment. 3. COMPENSATION AND BENEFITS. The compensation and benefits payable to the Executive under this Agreement shall be as follows, it being understood that (i) references to benefits offered by, or to officers of, the Holding Company are intended to include benefits offered by, or to officers of, the Bank and (ii) payments or benefits required to be provided by the Holding Company may be provided by the Bank: 3.1. SALARY. For all services rendered by the Executive to the Holding Company and its affiliates, the Executive shall be entitled to receive a base salary at an annual rate not less than the Executive's base salary as in effect on the Effective Date, subject to increase from time to time in accordance with the usual practices of the Holding Company with respect to review of compensation of its senior executives. In addition, if the Executive's annual base salary is increased at any time before the Expiration Date, such increased annual base salary shall become a floor below which such annual base salary shall not fall at any future time during the Term of Employment without the Executive's written consent, provided, however, that such increased base salary may be reduced (but not below the level originally in effect on the Effective Date) on a basis consistent with and concurrently with across-the-board salary reductions based on the Employers' financial performance similarly affecting all senior management personnel of the Holding Company and its affiliates. The Executive's salary shall be payable in periodic installments in accordance with the Holding Company's usual practice for its senior executives. 3.2. REGULAR BENEFITS. The Executive shall also be entitled to participate in any and all employee benefit plans, medical insurance plans, disability income plans, retirement plans, bonus incentive plans, and other benefit plans from time to time in effect for senior executives of the Holding Company. Such participation shall be subject to (i) the terms of the applicable plan documents, (ii) generally applicable policies of the Holding Company and (iii) the discretion of the Board of Directors of the Holding Company or any administrative or other committee provided for in or contemplated by such plans. 3.3. OTHER BENEFITS. (a) SERP. The Executive shall continue to be entitled to the supplemental retirement benefits provided by the Salary Continuation Agreement dated [_____] between the Bank and the Executive. 3.4. BUSINESS EXPENSES. The Holding Company shall reimburse the Executive for all reasonable travel and other business expenses incurred by the Executive in the performance of the Executive's duties and responsibilities, subject to such reasonable requirements with respect to substantiation and documentation as may be specified by the Holding Company. 3.5. VACATION. The Executive shall be entitled to not less than four (4) weeks of vacation per year, to be taken at such times and intervals as shall be determined by the Executive with the approval of the Holding Company, which approval shall not be unreasonably withheld. -2- 3.6. GENERAL. Nothing paid to the Executive under any plan, policy or arrangement currently in effect or made available in the future shall be deemed to be in lieu of other compensation to the Executive as described in this Agreement. 4. EXTENT OF SERVICE. During the Term of Employment, the Executive shall, subject to the direction and supervision of the Boards of Directors of the Holding Company and the Bank, devote the Executive's full time, best efforts and business judgment, skill and knowledge to the advancement of the Employers' interests and to the discharge of the Executive's duties and responsibilities hereunder. The Executive shall not engage in any other business activity, except as may be approved by the Board of Directors of the Holding Company; provided, however, that nothing herein shall be construed as preventing the Executive from: (a) investing the Executive's assets in such form or manner as shall not require any material services on the Executive's part in the operations or affairs of the companies or the other entities in which such investments are made, provided that the Executive may not own any interest in any entity that competes with the Holding Company or any affiliate (other than up to two percent (2%) of the outstanding voting stock of such an entity that is a publicly traded entity); or (b) serving on the board of directors of any company not in competition with the Holding Company or any affiliate, provided that the Executive shall not render any material services with respect to the operations or affairs of any such company; or (c) engaging in religious, charitable or other community or non-profit activities which do not impair the Executive's ability to fulfill the Executive's duties and responsibilities under this Agreement. 5. TERMINATION UPON DEATH. In the event of the Executive's death during the Term of Employment, the Executive's employment (and the Term of Employment) shall terminate on the date of the Executive's death. The Holding Company shall pay to the Executive's beneficiary, designated in writing to the Holding Company prior to the Executive's death (or to the Executive's estate, if the Executive fails to make such designation), (i) any base salary or other compensation earned through the date of death, plus (ii) the Executive's pro rata share (based on the portion of the then-current calendar year during which the Executive was employed before the Executive's death) of the highest of the aggregate annual amounts paid to the Executive (or accrued) as bonuses or other cash incentive compensation for the three calendar years preceding the termination of employment, plus (iii) the base salary that the Executive would have earned for a period of six months following the Executive's death, plus (iv) any other compensation and benefits as may be provided in accordance with the terms and provisions of any applicable plans and programs, if any, of the Holding Company. In addition, the Holding Company shall continue in effect the medical benefits of the Executive's dependents at the level in effect on, and at the same out-of-pocket cost to the Executive as of, the date of death for a six month period commencing on the date of death (or, if such continuation is not permitted by applicable law or if the Holding Company Board so determines in its sole discretion, the Holding Company shall provide the economic equivalent in lieu thereof). -3- 6. DISCHARGE FOR SPECIALLY-DEFINED CAUSE. 6.1. NOTICE AND DETERMINATION OF SPECIALLY-DEFINED CAUSE. The Bank and the Holding Company may terminate the Executive's employment during the Term of Employment for Specially-Defined Cause. Such termination shall be deemed to have occurred for "SPECIALLY-DEFINED CAUSE" only if: (a) the Boards of Directors of each of the Holding Company and the Bank, by separate majority votes of their entire membership, determine that the Executive (i) has been convicted for the commission of a felony from which all final appeals have been taken, or (ii) has willfully and intentionally engaged in dishonest or gross misconduct in connection with the Executive's employment by the Holding Company or any affiliate thereof, in either case that results in material and demonstrable financial harm to the Holding Company or any of its affiliates. No act or failure to act on the part of the Executive shall be considered "willful" unless it is done, or omitted to be done, by the Executive in bad faith or without reasonable belief that the Executive's action or omission was in the best interests of the Holding Company or any affiliate thereof. Any act or failure to act that is based upon authority given pursuant to a resolution duly adopted by the Boards of Directors of the Holding Company and the Bank, or the advice of legal counsel for the Holding Company, shall be conclusively presumed to be done, or omitted to be done, by the Executive in good faith and in the best interests of the Holding Company or any affiliate thereof; and (b) at least forty-five (45) days prior to the votes contemplated by Section 6.1(a), the Holding Company has provided the Executive with notice of intent of the Holding Company and the Bank to discharge the Executive for Specially-Defined Cause, detailing with particularity the facts and circumstances which are alleged to constitute Specially-Defined Cause (the "NOTICE OF INTENT TO DISCHARGE"); and (c) after the giving of the Notice of Intent to Discharge and before the taking of the votes contemplated by Section 6.1(a), the Executive (together with the Executive's legal counsel, if the Executive so desires) is afforded a reasonable opportunity to make both written and oral presentations before the Boards of Directors of the Holding Company and the Bank for the purpose of refuting the alleged grounds for Specially-Defined Cause for the Executive's discharge; and (d) after the votes contemplated by Section 6.1(a), the Holding Company and the Bank have furnished to the Executive a notice of termination which shall specify the effective date of the Executive's termination of employment (which shall in no event be earlier than the date on which such notice is deemed given) and include a copy of a resolution or resolutions adopted by the Boards of Directors of the Holding Company and the Bank authorizing the termination of the Executive's employment for Specially-Defined Cause and stating with particularity the facts and circumstances found to -4- constitute Specially-Defined Cause for the Executive's discharge (the "FINAL DISCHARGE NOTICE"). 6.2. SUSPENSION; FINAL DISCHARGE. Following the giving of a Notice of Intent to Discharge, the Bank and the Holding Company may temporarily suspend the Executive's duties and authority and, in such event, may also suspend the payment of salary and other cash compensation, but not the Executive's participation in retirement, insurance and other employee benefit plans. If the Executive is discharged for Specially-Defined Cause, all payments withheld during the period of suspension shall be deemed forfeited and shall not be payable to the Executive. If the Bank and the Holding Company do not give a Final Discharge Notice to the Executive within one hundred twenty (120) days after giving a Notice of Intent to Discharge, the Notice of Intent to Discharge shall be deemed withdrawn and any future action to discharge the Executive for Specially-Defined Cause shall require the giving of a new Notice of Intent to Discharge. 6.3. TERMINATION OF OBLIGATIONS. In the event of termination pursuant to this Section 6, the Term of Employment shall terminate and the Holding Company shall pay to the Executive an amount equal to the sum of (a) base salary or other compensation earned through the date of termination, plus (b) any other compensation and benefits as may be provided in accordance with the terms and provisions of any applicable plans and programs, if any, of the Holding Company. All other obligations of the Holding Company under this Agreement shall terminate as of the date of termination. 7. TERMINATION BY THE EXECUTIVE. 7.1. TERMINATION BY THE EXECUTIVE FOR GOOD REASON. (a) The Executive shall be entitled to terminate the Executive's employment hereunder for or with Good Reason (as defined in Section 7.4). Upon any such termination, the Executive shall be entitled to receive the benefits set forth in Section 7.5. A termination of employment by the Executive for Good Reason shall be effectuated by giving the Holding Company written notice ("Notice of Termination for Good Reason") of the termination, setting forth in reasonable detail the specific conduct of the Holding Company that constitutes Good Reason and the specific provision(s) of this Agreement on which the Executive relies. A termination of employment by the Executive for Good Reason shall be effective on the fifth business day following the date when the Notice of Termination for Good Reason is given, unless the notice sets forth a later date (which date shall in no event be later than 30 days after the notice is given). (b) The failure to set forth any fact or circumstance in a Notice of Termination for Good Reason shall not constitute a waiver of the right to assert, and shall not preclude the Executive from asserting, such fact or circumstance in an attempt to enforce any right under or provision of this Agreement. 7.2. OTHER VOLUNTARY TERMINATION BY THE EXECUTIVE. During the Term of Employment, the Executive may effect, upon sixty (60) days prior written notice to the Holding Company, a Voluntary Termination of the Executive's employment hereunder and thereupon the -5- Term of Employment (if not already expired) shall end. A "VOLUNTARY TERMINATION" shall mean a termination of employment by the Executive on the Executive's own initiative other than (a) a termination due to death or Disability (as defined in Section 11), (b) a termination for Good Reason (as defined in Section 7.4), (c) a termination due to Retirement (as defined in Section 7.3), or (d) a termination as a result of the normal expiration of the full Term of Employment. If, during the Term of Employment, the Executive's employment is so terminated due to a Voluntary Termination, the Term of Employment shall thereupon end and the Holding Company shall pay to the Executive an amount equal to the sum of (a) base salary or other compensation earned through the date of termination, plus (b) any other compensation and benefits as may be provided in accordance with the terms and provisions of any applicable plans and programs, if any, of the Holding Company. 7.3. TERMINATION DUE TO RETIREMENT. "RETIREMENT" shall mean the termination of the Executive's employment with the Holding Company for any reason by the Executive at any time after the Executive attains "Retirement Age" (as hereinafter defined). "RETIREMENT AGE" shall mean the earlier to occur of (x) age 65 and (y) an age of 60 or greater at which the Holding Company, by vote of the Board of Directors, permits the Executive to retire. The Executive may terminate the Executive's employment hereunder due to Retirement upon thirty (30) days prior written notice to the Holding Company. If, during the Term of Employment, the Executive's employment is so terminated due to Retirement, the Term of Employment shall thereupon end and the Executive shall be entitled to (i) continuation of the medical benefits of the Executive and Executive's dependents at the level in effect on, and at the same out--of--pocket cost to the Executive as of, the date of termination -for the one-year period following the termination of the Executive's employment due to Retirement (or, if such continuation is not permitted by applicable law or if the Board of the Holding Company so determines in its sole discretion, the Holding Company shall provide the economic equivalent in lieu thereof), and (ii) any other compensation and benefits as may be provided in accordance with the terms and provisions of any applicable plans and programs, if any, of the Holding Company. 7.4. GOOD REASON. For purposes of this Agreement, the term "GOOD REASON" shall mean any of the following: (a) the failure of the Board of Directors of the Bank to elect the Executive to the office of Executive Vice President, or to continue the Executive in such office; (b) the failure by either Employer to comply with the provisions of Section 3.1; (c) a material breach by either Employer of any of the provisions of this Agreement which failure or breach shall have continued for thirty (30) days after written notice from the Executive to the Holding Company specifying the nature of such failure or breach; and (d) a determination by the Board of either Employer not to continue to extend the term of this Agreement as provided in Section 2. In addition, "Good Reason" shall include the following events but only if they shall occur within two years following a "Change in Control" (as defined in Section 7.5): -6- (e) a change in the Executive's principal place of employment to a place that is not the principal executive office of the Holding Company, or a relocation of the Holding Company's principal executive office to a location that increases the Executive's commute from the Executive's principal residence to the Holding Company's principal executive office by more than ten (10) miles; (f) the failure by either Employer to continue to provide the Executive with benefits substantially similar to those available to the Executive under any of the life insurance, medical, health and accident, or disability plans or any other material benefit plans in which the Executive was participating at the time of the Change in Control, or the taking of any action by either Employer which would directly or indirectly materially reduce any of such benefits, or the failure by either Employer to provide the Executive with the number of paid vacation days to which the Executive is entitled on the basis of years of service with the Employers in accordance with the Employers; normal vacation policy in effect at the time of the Change in Control; (g) any action by either Employer which results in a significant diminution in the Executive's responsibilities, authorities, powers, functions or duties; and (h) the failure of the Holding Company to obtain a satisfactory agreement from any successor to assume and agree to perform this Agreement. 7.5. CHANGE IN CONTROL. A "Change in Control" shall be deemed to have occurred in any of the following events: (a) If there has occurred a change in control which the Holding Company would be required to report in response to Item 5.01 of Form 8-K promulgated under the Securities Exchange Act of 1934, as amended (the "1934 ACT"), or, if such regulation is no longer in effect, any regulations promulgated by the Securities and Exchange Commission pursuant to the 1934 Act which are intended to serve similar purposes; (b) When any "person" (as such term is used in Sections 13(d) and 14(d)(2) of the 1934 Act) becomes a "beneficial owner" (as such term is defined in Rule 13d-3 promulgated under the 1934 Act), directly or indirectly, of securities of the Holding Company or the Bank representing twenty-five percent (25%) or more of the total number of votes that may be cast for the election of directors of the Holding Company or the Bank, as the case may be; (c) During any period of two consecutive years, individuals who at the beginning of such period constitute the Board of Directors of the Holding Company, and any new director (other than a director designated by a person who has entered into an agreement with the Holding Company to effect a transaction described in Subsection (b), (d) or (e) of this Section 7.5) whose election by the Board or nomination for election by the Holding Company's stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute at least a majority of the Board of Directors of the Holding Company; -7- (d) The stockholders of the Holding Company approve a merger, share exchange or consolidation ("MERGER OR CONSOLIDATION") of the Holding Company with any other corporation, other than (a) a merger or consolidation which would result in the voting securities of the Holding Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 70% of the combined voting power of the voting securities of the Holding Company or such surviving entity outstanding immediately after such merger or consolidation or (b) a merger or consolidation effected to implement a recapitalization of the Holding Company (or similar transaction) in which no "person" (as hereinabove defined) acquires more than 30% of the combined voting power of the Holding Company's then outstanding securities; or (e) The stockholders of the Holding Company or the Bank approve a plan of complete liquidation of the Holding Company or the Bank or an agreement for the sale or disposition by the Holding Company or the Bank of all or substantially all of the Holding Company's or the Bank's assets. 8. TERMINATION BY EITHER EMPLOYER WITHOUT SPECIALLY-DEFINED CAUSE. The Executive's employment with the Holding Company may be terminated without Specially-Defined Cause by the Board of Directors of either Employer, provided, however, that the Holding Company shall have the obligation upon any such termination to make the payments to the Executive provided for under Section 7.5 of this Agreement. 9. CERTAIN TERMINATION BENEFITS. In the event of termination pursuant to Section 7.1 or 7.4, the Executive shall be entitled to each of the following benefits: 9.1. EARNINGS TO DATE OF TERMINATION. An amount equal to the sum of (a) base salary or other compensation earned through the date of termination, plus (b) the Executive's pro rata share (based on the portion of the then-current calendar year during which the Executive was employed before termination of the Executive's employment) of the highest of the aggregate annual amounts paid to the Executive (or accrued) as bonuses or other cash incentive compensation for the three calendar years preceding the termination of employment, plus (c) any other compensation and benefits as may be provided in accordance with the terms and provisions of any applicable plans and programs, if any, of the Holding Company. 9.2. LUMP SUM PAYMENT. A lump sum severance benefit equal to three times the Executive's Highest Yearly Compensation. "HIGHEST YEARLY COMPENSATION" shall be the highest Total Compensation of the Executive during the three calendar years preceding the termination of employment. "TOTAL COMPENSATION" for each year shall be the aggregate of (i) all base salary paid for such year; (ii) any bonuses or other cash incentive compensation paid during such year, (iii) any amount which is contributed by the Employers on the Executive's behalf pursuant to a salary reduction agreement and which is not included in the Executive's gross income under Sections 125, 132(f) or 402(e)(3) of the Internal Revenue Code of 1986, as amended (the "CODE"); (iv) any amounts earned but deferred with respect to such calendar year, and (v) any other amounts reported on the Executive's Form W-2 (Wages, tips, other compensation box) for such year. The lump sum payment shall be payable to the Executive in one lump-sum on the date of termination of employment. -8- 9.3. BENEFIT CONTINUATION. Continuation of the disability and medical benefits described in Section 3.1 existing on the date of termination at the level in effect on, and at the same out-of-pocket cost to the Executive as of, the date of termination for a period of three years following the Executive's date of termination of employment. 9.4. PENSION ADJUSTMENT. An amount equal to the excess of (a) the actuarial value of the benefits which the Executive would have accrued under each of the Holding Company's qualified and non-qualified pension plans in which the Executive was a participant as of the date of termination of employment if (i) the Executive's employment had continued at the Executive's level of total compensation (determined as of the date of termination of employment) for a period of three years following the Executive's date of termination of employment and (ii) each such plan had remained in effect during such one-year period, over (b) the actuarial value of the Executive's actual benefits under such qualified and non-qualified pension plans. The actuarial value of such benefits shall be determined by the Compensation Committee of the Holding Company in its reasonable discretion. 9.5. VESTING OF STOCK AWARDS AND OPTIONS. There shall be an acceleration of all vesting provisions, so that as of the date of termination of the Executive's employment, all stock awards made by the Holding Company to the Executive, to the extent then unvested or forfeitable, shall become immediately and fully vested and non-forfeitable, and all options to purchase Common Stock of the Holding Company, to the extent then not exercisable, shall become immediately and fully exercisable. 10. ADJUSTMENT FOR UNAVAILABILITY OF BENEFITS. If, in spite of the provisions of this Agreement, benefits or service credits under any benefit plan provided by a third party shall not be payable or provided under any such plan to the Executive, or to the Executive's dependents, beneficiaries or estate, because the Executive is no longer deemed to be an employee of the Holding Company, the Holding Company shall pay or provide for payment of such benefits and service credits for such benefits to the Executive, or to the Executive's dependents, beneficiaries or estate. 11. DISABILITY. 11.1. TERMINATION DUE TO DISABILITY. Either Employer may terminate the Executive's employment upon a determination, by vote of a majority of the members of its Board of Directors, acting in reliance on the written advice of a medical professional acceptable to the Board, that the Executive is suffering from a physical or mental impairment which, at the date of the determination, has prevented the Executive from performing the Executive's assigned duties on a substantially full-time basis for a period of at least one hundred and eighty (180) days during the period of one (1) year ending with the date of the determination or is likely to result in death or prevent the Executive from performing the Executive's assigned duties on a substantially full-time basis for a period of at least one hundred and eighty (180) days during the period of one (1) year beginning with the date of the determination (such impairment, the "DISABILITY"). In such event: (a) The Holding Company shall pay and deliver to the Executive an amount equal to the sum of (x) base salary or other compensation earned through the date of -9- termination, plus (y) any other compensation and benefits as may be provided in accordance with the terms and provisions of any applicable plans and programs, if any, of the Holding Company. (b) In addition to the amounts payable pursuant to Section 11.1, the Holding Company shall continue to pay the Executive the Executive's base salary, at the annual rate in effect for the Executive immediately prior to the termination of the Executive's employment, during the "Initial Continuation Period." The "INITIAL CONTINUATION PERIOD" shall commence on the date of termination of employment pursuant to Section 11.1 and shall end on the earliest of: (i) the expiration of one hundred and eighty (180) days after the date of termination of the Executive's employment; (ii) the date on which long-term disability insurance benefits are first payable to the Executive under any long-term disability insurance plan ("LTD PLAN") covering employees of the Bank or the Holding Company (the "LTD ELIGIBILITY DATE"); (iii) the date of the Executive's death; and (iv) the Expiration Date. If the end of the Initial Continuation Period is neither the LTD Eligibility Date nor the date of the Executive's death, the Holding Company shall continue to pay the Executive the Executive's base salary, at an annual rate equal to sixty percent (60%) of the annual rate in effect for the Executive immediately prior to the termination of the Executive's employment (the "60% AMOUNT"), during an additional period ending on the earliest of the LTD Eligibility Date, the date of the Executive's death and the Expiration Date. While receiving disability payments under such LTD Plan, the Holding Company shall pay to the Executive an additional payment of such an amount, if any, as may be necessary so that the aggregate of such additional payment and the Executive's disability income payments will equal the 60% Amount, and the Executive shall continue to participate in the Employers' benefit plans and to receive other benefits as specified in Section 3.1 until the Expiration Date, with all such benefits to be at the level in effect on, and at the same out-of-pocket cost to the Executive as of, the date of Disability. 11.2. EFFECTIVE DATE OF TERMINATION. A termination of employment due to Disability under this Section 11 shall be effected by notice of termination given to the Executive by the applicable Employer and shall take effect on the later of the effective date of termination specified in such notice or the date on which the notice of termination is deemed given to the Executive. A termination of employment by either Employer due to Disability under this Section 11 shall be effective to terminate the Executive's employment with each of the Bank and the Holding Company. 12. LIMITATION ON BENEFITS. It is the intention of the Executive and of the Employers that no payments by the Employers to or for the benefit of the Executive under this Agreement or any other agreement or plan pursuant to which the Executive is entitled to receive payments or benefits shall be non-deductible to the Employers by reason of the operation of Section 280G of the Code relating to parachute payments. Accordingly, and notwithstanding any other provision of this Agreement or any such agreement or plan, if by reason of the operation of said Section 280G, any such payments exceed the amount which can be deducted by the Employers, such payments shall be reduced to the maximum amount which can be deducted by the Employers. To the extent that payments exceeding such maximum deductible amount have been made to or for the benefit of the Executive, such excess payments shall be refunded to the Employers with -10- interest thereon at the applicable Federal Rate determined under Section 1274(d) of the Code, compounded annually, or at such other rate as may be required in order that no such payments shall be non-deductible to the Employers by reason of the operation of said Section 280G. To the extent that there is more than one method of reducing the payments to bring them within the limitations of said Section 280G, the Executive shall determine which method shall be followed, provided that if the Executive fails to make such determination within forty-five days after the Employers have sent the Executive written notice of the need for such reduction, the Employers may determine the method of such reduction in their sole discretion. If any dispute between the Employers and the Executive as to any of the amounts to be determined under this Section 6 or the method of calculating such amounts cannot be resolved by the Employers and the Executive, either party after giving three days written notice to the other, may refer the dispute to a partner in a Massachusetts office of a firm of independent certified public accountants selected jointly by the Employers and the Executive. The determination of such partner as to the amounts to be determined under Section 6.1 and the method of calculating such amounts shall be final and binding on both the Employers and the Executive. The Employers shall bear the costs of any such determination. 13. CONFIDENTIAL INFORMATION. The Executive will not disclose to any other Person (as defined in Section 16.2) (except as required by applicable law or in connection with the performance of the Executive's duties and responsibilities hereunder), or use for the Executive's own benefit or gain, any confidential information of the Holding Company or any affiliate obtained by the Executive incident to the Executive's employment with the Holding Company or the Bank. The term "CONFIDENTIAL INFORMATION" includes, without limitation, financial information, business plans, prospects and opportunities (such as lending relationships, financial product developments, or possible acquisitions or dispositions of business or facilities) which have been discussed or considered by the management of the Holding Company or the Bank but does not include any information which has become part of the public domain by means other than the Executive's nonobservance of the Executive's obligations hereunder. 14. NO MITIGATION; NO OFFSET. In the event of any termination of employment under this Agreement, the Executive shall be under no obligation to seek other employment or to mitigate damages, and there shall be no offset against any amounts due to the Executive under this Agreement for any reason, including, without limitation, on account of any remuneration attributable to any subsequent employment that the Executive may obtain. Any amounts due under this Agreement are in the nature of severance payments or liquidated damages, or both, and are not in the nature of a penalty. 15. NON-COMPETITION; NON-SOLICITATION. For purposes of this Section 15, the term "EMPLOYER" shall include not only each of the Holding Company and the Bank but also every other affiliate of the Holding Company. 15.1. WHILE EMPLOYED. During such time as the Executive is employed hereunder, the Executive will not compete with the banking or any other business conducted by any Employer during the period of the Executive's employment hereunder, nor will the Executive attempt to hire any employee of any Employer, assist in such hiring by any other Person, encourage any such employee to terminate his or her relationship with any Employer, or interfere with or damage (or attempt to interfere with or damage) any relationship between any Employer -11- and any customers of any Employer or solicit or encourage any customer of any Employer to terminate its relationship with any Employer or to conduct with any other person any business or activity which such customer conducts or could conduct with any Employer. 15.2. POST-EMPLOYMENT. The provisions of this Section 15.2 shall not be binding on the Executive (and shall become of no further force or effect) after a Change in Control shall have occurred. The Executive agrees that during the one-year period following termination of the Executive's Employment for any reason (the "NONCOMPETITION PERIOD"), the Executive will not, directly or indirectly, (i) become a director, officer, employee, principal, agent, consultant or independent contractor of any insured depository institution, trust company or parent holding company of any such institution or company which has an office in any city or town in which the Bank maintains an office (a "COMPETING BUSINESS"), provided, however, that this provision shall not prohibit the Executive from (x) owning bonds, non-voting preferred stock or up to five percent (5%) of the outstanding common stock of any such entity if such common stock is publicly traded and (y) being employed by a Competing Business outside of such cities and towns so long as the Executive is in compliance with the provisions of the remainder of this Section 15.2. During the Noncompetition Period, the Executive will not, directly or indirectly, (i) solicit or encourage any person who was employed by any Employer on the date of termination of the Executive's employment to leave his or her employment at any Employer, or (ii) encourage or assist any person with whom the Executive has an employment or consulting or other similar relationship in identifying, recruiting or soliciting any commercial loan officer or relationship manager who was employed by any Employer on the date of termination of the Executive's employment ("TERMINATION DATE"), or (iii) assist such person in formulating an employment package for such officer or manager to the extent such assistance involves the use of confidential information (as that term is defined in Section 13). The provisions of this Section 15.2 shall not be construed to prohibit any person who employs the Executive as an employee or consultant from advertising generally for employees in the markets served by any Employer or from hiring any candidate, whether or not such person was employed by an Employer, so long as the Executive does not breach the covenants set forth in this Section 15.2. During the Noncompetition Period, the Executive will not, directly or indirectly, solicit or encourage or assist others to solicit any business from any person or entity which, together with its affiliates, had commercial loans outstanding from the Bank which in the aggregate amounted to $1,000,000 or more at any time within the six-month period prior to the Termination Date ("COMMERCIAL LOAN CUSTOMERS"). This Section 15.2 shall not be construed to prohibit any of the Executive's future employers from making general public announcements to the effect that the Executive has become affiliated with such new employer or holding receptions to introduce the Executive to persons other than Commercial Loan Customers. The Executive agrees to inform any potential new employer of the covenant set forth in this Section 15.2 prior to accepting employment during the Noncompetition Period. 16. MISCELLANEOUS 16.1. CONFLICTING AGREEMENTS. The Executive hereby represents and warrants that the execution of this Agreement and the performance of the Executive's obligations hereunder will not breach or be in conflict with any other agreement to which the Executive is a party or is bound, and that the Executive is not now subject to any covenants against competition or similar covenants which would affect the performance of the Executive's obligations hereunder. -12- 16.2. DEFINITION OF "PERSON". For purposes of this Agreement, the term "PERSON" shall mean an individual, a corporation, an association, a partnership, an estate, a trust and any other entity or organization. 16.3. WITHHOLDING. All payments made under this Agreement shall be net of any tax or other amounts required to be withheld under applicable law. 16.4. ARBITRATION OF DISPUTES. Any controversy or claim arising out of or relating to this Agreement or the breach thereof shall be settled by arbitration in accordance with the laws of The Commonwealth of Massachusetts by three arbitrators, one of whom shall be appointed by the Holding Company, one by the Executive and the third by the first two arbitrators. If the first two arbitrators cannot agree on the appointment of a third arbitrator, then the third arbitrator shall be appointed by the American Arbitration Association in the City of Boston. Such arbitration shall be conducted in the City of Boston in accordance with the rules of the American Arbitration Association, except with respect to the selection of arbitrators which shall be as provided in this Section 16.4. Judgment upon the award rendered by the arbitrators may be entered in any court having jurisdiction thereof. 16.5. INDEMNIFICATION FOR ATTORNEYS' FEES. The Holding Company shall indemnify, hold harmless and defend the Executive against reasonable costs, including legal fees and expenses (collectively, "EXPENSES"), incurred by the Executive in connection with or arising out of any action, suit, proceeding (including any tax controversy) or contest in which the Executive may be involved, as a result of the Executive's efforts, in good faith, to defend or enforce the terms of this Agreement. For purposes of this Agreement, any settlement agreement which provides for payment of any amounts in settlement of the Holding Company's or the Bank's obligations hereunder shall be conclusive evidence of the Executive's entitlement to indemnification hereunder, and any such indemnification payments shall be in addition to amounts payable pursuant to such settlement agreement, unless such settlement agreement expressly provides otherwise. Unless it is determined that under the circumstances recovery by the Executive of all or a part of any such Expenses would be unjust, the Holding Company shall pay as incurred, to the full extent permitted by law, all Expenses that the Executive may reasonably incur as a result of or in connection with the Executive's consultation with legal counsel or arising out of any action, suit, proceeding, tax controversy or contest (regardless of the outcome thereof) by the Holding Company, the Executive or others regarding the validity or enforceability of, or liability under, any provision of this Agreement or any guarantee of performance thereof (including as a result of any contest by the Executive about the amount of any payment pursuant to this Agreement), plus in each case interest on any delayed payment at the applicable federal rate provided for in Section 7872(f)(2)(A) of the Code. This Section 16.5 shall apply whether such consultation, action, suit, proceeding, tax controversy or contest arises before, on, after or as a result of a Change of Control and shall continue in effect notwithstanding the termination or expiration of this Agreement or the Term of Employment. 16.6. INTERPRETATION. The recitals hereto constitute an integral part of this Agreement. References to Sections include subsections, which are part of the related Section (e.g., a section numbered "Section 5.5" would be part of "Section 5" and references to "Section 5" would also refer to material contained in the subsection described as "Section 5.5"). -13- 16.7. ASSIGNMENT; SUCCESSORS AND ASSIGNS, ETC. (a) This Agreement is personal to the Executive and, without the prior written consent of the Holding Company, shall not be assignable by the Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive's legal representatives. (b) This Agreement shall inure to the benefit of and be binding upon the Holding Company and its successors and permitted assigns. (c) The Holding Company may not assign this Agreement or any interest herein without the prior written consent of the Executive and without such consent any attempted transfer or assignment shall be null and of no effect; provided, however, that the Holding Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Holding Company expressly to assume and to agree to perform this Agreement in the same manner and to the same extent that the Holding Company would have been required to perform it if no such succession had taken place. As used in this Agreement, "the Holding Company" shall mean both the Holding Company as defined above and any such successor that assumes and agrees to perform this Agreement, by operation of law or otherwise. 16.8. ENFORCEABILITY. If any portion or provision of this Agreement shall to any extent be declared illegal or unenforceable by a court of competent jurisdiction, then the remainder of this Agreement, or the application of such portion or provision in circumstances other than those as to which it is so declared illegal or unenforceable, shall not be affected thereby, and each portion and provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law. 16.9. REDUCTIONS. Notwithstanding anything to the contrary contained in this Agreement, any and all payments and benefits to be provided to the Executive hereunder are subject to reduction to the extent required by applicable statutes, regulations, rules and directives of federal, state and other governmental and regulatory bodies having jurisdiction over the Bank or the Holding Company. The Executive confirms that the Executive is aware of the fact that the Federal Deposit Insurance Corporation has the power to preclude the Bank from making payments to the Executive under this Agreement under certain circumstances. The Executive agrees that neither the Bank nor the Holding Company shall be deemed to be in breach of this Agreement if it is precluded from making a payment otherwise payable hereunder by reason of regulatory requirements binding on the Bank or the Holding Company, as the case may be. 16.10. WAIVER. No waiver of any provision hereof shall be effective unless made in writing and signed by the waiving party. The failure of any party to require the performance of any term or obligation of this Agreement, or the waiver by any party of any breach of this Agreement, shall not prevent any subsequent enforcement of such term or obligation or be deemed a waiver of any subsequent breach. -14- 16.11. NOTICES. Any notices, requests, demands and other communications provided for by this Agreement shall be sufficient if in writing and delivered in person or sent by registered or certified mail, postage prepaid, and addressed to the Executive at the Executive's last known address on the books of the Holding Company or, in the case of the Holding Company, at its main office, attention of the Board of Directors. 16.12. ELECTION OF REMEDIES. An election by the Executive to resign for Good Reason under the provisions of this Agreement shall not constitute a breach by the Executive of any agreement the Executive may have with the Holding Company and shall not be deemed a voluntary termination of employment by the Executive for the purpose of interpreting the provisions of any of the Holding Company's benefit plans, programs or policies. 16.13. AMENDMENT. This Agreement may be amended or modified only by a written instrument signed by the Executive and by a duly authorized representative of the Holding Company. 16.14. NO EFFECT ON LENGTH OF SERVICE. Nothing in this Agreement shall be deemed to prohibit the Holding Company or the Bank from terminating the Executive's employment before the end of the Term of Employment with or without notice for any reason. This Agreement shall determine the relative rights and obligations of the Bank, the Holding Company and the Executive in the event of any such termination. In addition, nothing in this Agreement shall require the termination of the Executive's employment at the expiration of the Term of Employment. Any continuation of the Executive's employment beyond the expiration of the Term of Employment shall be on an "at-will" basis unless the Bank, the Holding Company and the Executive agree otherwise. 16.15. ALLOCATION OF OBLIGATIONS AS BETWEEN THE BANK AND THE HOLDING COMPANY. The parties understand that the Executive will perform substantial services for the Holding Company, the Bank, and other affiliates of the Holding Company. Unless otherwise determined by the Board of Directors of the Holding Company, the Executive shall not be entitled to compensation in addition to the compensation set forth in Section 2 of this Agreement as a result of the Executive's serving as an officer of any affiliate of the Holding Company. The Bank and the Holding Company shall apportion between them the amounts to be paid under this Agreement, based upon the services rendered by the Executive to each of the Bank and the Holding Company, respectively. Any entitlement of the Executive to severance compensation or other termination benefits under this Agreement shall be determined on the basis of the aggregate compensation payable to the Executive by the Bank and the Holding Company, and liability therefor shall be apportioned between the Bank and the Holding Company in the same manner as compensation paid to the Executive for services to each of them. It is the intent and purpose of this Section 16.15 that the Executive have the same legal and economic rights that the Executive would have if all of the Executive's services were rendered to and all of the Executive's compensation were paid by the Holding Company. 16.16. PAYMENTS TO ESTATE OR BENEFICIARIES. In the event of the Executive's death prior to the completion by the Holding Company of all payments due the Executive under this Agreement, the Holding Company shall continue such payments (other than payments which by their terms cease upon death) to the Executive's beneficiary designated in writing to the Holding Company prior to the Executive's death (or to the Executive's estate, if the Executive fails to -15- make such designation) and, as applicable, to the Executive's surviving dependents. 16.17. ENTIRE AGREEMENT; EFFECT ON PRIOR AGREEMENTS. This Agreement constitutes the entire agreement between the parties pertaining to its subject matter and supersedes all prior and contemporaneous agreements, understandings, negotiations, prior draft agreements, and discussions of the parties, whether oral or written. 16.18. COUNTERPARTS AND FACSIMILE SIGNATURES. This Agreement may be executed in two or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each party and delivered to the other party, it being understood that all parties need not sign the same counterpart. This Agreement may be executed by facsimile signatures. 16.19. GOVERNING LAW. This is a Massachusetts contract and shall be construed under and be governed in all respects by the laws of The Commonwealth of Massachusetts without giving effect to its principles of conflicts of laws. * * * * * * -16- IN WITNESS WHEREOF, this Agreement has been executed as a sealed instrument by the Holding Company, by its duly authorized officer, and by the Executive, as of the date first above written. ATTEST: BENJAMIN FRANKLIN BANCORP, INC. _________________________________ By:_______________________________ Title:____________________________ [Seal] WITNESS EXECUTIVE _________________________________ __________________________________ [__________] The undersigned hereby unconditionally guarantees the obligations of the Holding Company under the foregoing Agreement. BENJAMIN FRANKLIN BANK By:______________________________ Title:___________________________ -17- EX-10.2 12 b52576bfexv10w2.txt EX-10.2 FORM OF CHANGE IN CONTROL AGREEMENT WITH SIX OTHER EXECUTIVE OFFICERS EXHIBIT 10.2 CHANGE IN CONTROL AGREEMENT AGREEMENT made as of the [__] day of [_____], 2005, by and among Benjamin Franklin Bancorp, Inc., a Massachusetts corporation (the "HOLDING COMPANY") and the parent company for Benjamin Franklin Bank, a Massachusetts chartered savings bank, with its executive offices in Franklin, Massachusetts (the "BANK") (the Bank and the Holding Company shall be hereinafter collectively referred to as the "EMPLOYERS"), and [_________] of [_________], Massachusetts (the "EXECUTIVE"). 1. PURPOSE. In order to allow the Executive to consider the prospect of a Change in Control (as defined in Section 2) in an objective manner, and in consideration of the services rendered and to be rendered by the Executive to the Employers and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by the Employers, the Employers are willing to provide, subject to the terms of this Agreement, certain severance benefits to protect the Executive from the consequences of a Terminating Event (as defined in Section 3) occurring subsequent to a Change in Control. 2. CHANGE IN CONTROL. A "Change in Control" shall be deemed to have occurred in any of the following events: 2.1 If there has occurred a change in control which the Holding Company would be required to report in response to Item 5.01 of Form 8-K promulgated under the Securities Exchange Act of 1934, as amended (the "1934 Act"), or, if such regulation is no longer in effect, any regulations promulgated by the Securities and Exchange Commission pursuant to the 1934 Act which are intended to serve similar purposes; 2.2 When any "person" (as such term is used in Sections 13(d) and 14(d)(2) of the 1934 Act) becomes a "beneficial owner" (as such term is defined in Rule 13d-3 promulgated under the 1934 Act), directly or indirectly, of securities of the Holding Company or the Bank representing twenty-five percent (25%) or more of the total number of votes that may be cast for the election of directors of the Holding Company or the Bank, as the case may be; 2.3 During any period of two consecutive years, individuals who at the beginning of such period constitute the Board of Directors of the Holding Company, and any new director (other than a director designated by a person who has entered into an agreement with the Holding Company to effect a transaction described in Section 2.2, 2.4, or 2.5 of this Agreement) whose election by the Board or nomination for election by the Holding Company's stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute at least a majority of the Board of Directors of the Holding Company; 2.4 The stockholders of the Holding Company approve a merger, share exchange or consolidation ("merger or consolidation") of the Holding Company with any other corporation, other than (a) a merger or consolidation which would result in the voting securities of the Holding Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 70% of the combined voting power of the voting securities of the Holding Company or such surviving entity outstanding immediately after such merger or consolidation or (b) a merger or consolidation effected to implement a recapitalization of the Holding Company (or similar transaction) in which no "person" (as hereinabove defined) acquires more than 30% of the combined voting power of the Holding Company's then outstanding securities; or 2.5 The stockholders of the Holding Company or the Bank approve a plan of complete liquidation of the Holding Company or the Bank or an agreement for the sale or disposition by the Holding Company or the Bank of all or substantially all of the Holding Company's or the Bank's assets. 3. TERMINATING EVENT. A "Terminating Event" shall mean 3.1 Termination by either of the Employers of the employment of the Executive with either of the Employers for any reason other than (i) death, (ii) deliberate dishonesty or gross misconduct of the Executive with respect to the Holding Company or the Bank or any subsidiary or affiliate thereof, or (iii) conviction of the Executive for the commission of a felony; or 3.2 Resignation of the Executive from the employ of either of the Employers, while the Executive is not receiving payments or benefits from either of the Employers by reason of the Executive's disability, subsequent to the occurrence of any of the following events: (a) a reduction in the Executive's annual base salary as in effect on the date hereof or as the same may be increased from time to time; or (b) the relocation of the Employers' offices at which the Executive is principally employed to a location that (i) is more than 25 miles away from the offices at which the Executive is principally employed immediately prior to the date of the Change in Control and (ii) increases the Executive's commute by more than 20 miles; or (c) the failure by either Employer to pay to the Executive any portion of his current compensation or to pay to the Executive any portion of an installment of deferred compensation under any deferred compensation program of either Employer within seven (7) days of the date such compensation is due; or (d) the failure by either Employer to continue the Executive's participation in any material compensation, incentive, bonus or benefit plan (or in a successor plan) in which the Executive participates immediately prior to the Change in Control or the failure of a successor in interest to make available its benefits plans to the Executive on a basis that is not substantially less favorable than the successor generally affords to its other employees holding similar positions; or (e) the failure of either Employer to obtain a satisfactory agreement from any successor to assume and agree to perform this Agreement. 4. SEVERANCE PAYMENT. In the event a Terminating Event occurs within two years after a Change in Control, the Holding Company shall pay to the Executive an amount equal to (x) [ONE, 2 TWO OR THREE] times the sum of: (i) the Executive's current base salary, plus (ii) the highest annual bonus paid during the most recent three calendar years, payable in one lump-sum payment on the date of termination. 5. BENEFIT CONTINUATION. In the event a Terminating Event occurs within two years after a Change in Control, the Holding Company shall continue to pay to the Executive the disability and medical benefits existing on the date of the Terminating Event at the level in effect on, and at the same out-of-pocket cost to the Executive as of, the date of such Terminating Event, for a period of [ONE, TWO OR THREE] years. In the event that the Employers are unable to provide the benefits set forth in this Section 5 due to the change in Executive's status to that of a non-employee, the Employers shall instead pay to the Executive a lump sum amount equal to the value of the benefits required to be provided by this Section 5. 6. LIMITATION ON BENEFITS. It is the intention of the Executive and of the Employers that no payments by the Employers to or for the benefit of the Executive under this Agreement or any other agreement or plan pursuant to which he is entitled to receive payments or benefits shall be non-deductible to the Employers by reason of the operation of Section 280G of the Internal Revenue Code of 1986, as amended ("Code") relating to parachute payments. Accordingly, and notwithstanding any other provision of this Agreement or any such agreement or plan, if by reason of the operation of said Section 280G, any such payments exceed the amount which can be deducted by the Employers, such payments shall be reduced to the maximum amount which can be deducted by the Employers. To the extent that payments exceeding such maximum deductible amount have been made to or for the benefit of the Executive, such excess payments shall be refunded to the Employers with interest thereon at the applicable Federal Rate determined under Section 1274(d) of the Code, compounded annually, or at such other rate as may be required in order that no such payments shall be non-deductible to the Employers by reason of the operation of said Section 280G. To the extent that there is more than one method of reducing the payments to bring them within the limitations of said Section 280G, the Executive shall determine which method shall be followed, provided that if the Executive fails to make such determination within forty-five days after the Employers have sent him written notice of the need for such reduction, the Employers may determine the method of such reduction in their sole discretion. 6.1 If any dispute between the Employers and the Executive as to any of the amounts to be determined under this Section 6 or the method of calculating such amounts cannot be resolved by the Employers and the Executive, either party after giving three days written notice to the other, may refer the dispute to a partner in a Massachusetts office of a firm of independent certified public accountants selected jointly by the Employers and the Executive. The determination of such partner as to the amounts to be determined under Section 6.1 and the method of calculating such amounts shall be final and binding on both the Employers and the Executive. The Employers shall bear the costs of any such determination. 6.2 The Executive confirms that he is aware of the fact that the Federal Deposit Insurance Corporation has the power to preclude the Bank from making payments to the Executive under this Agreement under certain circumstances. The Executive agrees that the Bank shall not be deemed to be in breach of this Agreement if it is precluded from making a payment otherwise payable hereunder by reason of regulatory requirements binding on the Bank. 3 7. EMPLOYMENT STATUS. This Agreement is not an agreement for the employment of the Executive and shall confer no rights on the Executive except as herein expressly provided. 8. TERM. This Agreement shall take effect as of the date hereof and shall terminate upon the earlier of (a) the resignation or termination of the Executive for any reason prior to a Change in Control, or (b) the resignation of the Executive after a Change in Control for any reason other than the occurrence of any of the events enumerated in Section 3.2 of this Agreement. 9. WITHHOLDING. All payments made by the Holding Company under this Agreement shall be net of any tax or other amounts required to be withheld by the Holding Company under applicable law. 10. ARBITRATION OF DISPUTES. Any controversy or claim arising out of or relating to this Agreement or the breach thereof shall be settled by arbitration in accordance with the laws of The Commonwealth of Massachusetts by three arbitrators, one of whom shall be appointed by the Holding Company, one by the Executive and the third by the first two arbitrators. If the first two arbitrators cannot agree on the appointment of a third arbitrator, then the third arbitrator shall be appointed by the American Arbitration Association in the City of Boston. Such arbitration shall be conducted in the City of Boston in accordance with the rules of the American Arbitration Association, except with respect to the selection of arbitrators which shall be as provided in this Section 10. Judgment upon the award rendered by the arbitrators may be entered in any court having jurisdiction thereof. In the event that it shall be necessary or desirable for the Executive to retain legal counsel and/or incur other costs and expenses in connection with the enforcement of any or all of the Executive's rights under this Agreement, the Holding Company shall pay (or the Executive shall be entitled to recover from the Holding Company, as the case may be) the Executive's reasonable attorneys' fees and other reasonable costs and expenses in connection with the enforcement of said rights, if the Executive prevails on the merits as determined by the arbitrators. 11. ASSIGNMENT; SUCCESSORS AND ASSIGNS, ETC. Assignment; Successors and Assigns, etc. 11.2 This Agreement is personal to the Executive and, without the prior written consent of the Holding Company, shall not be assignable by the Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive's legal representatives. 11.3 This Agreement shall inure to the benefit of and be binding upon the Holding Company and its successors and permitted assigns. 11.4 The Holding Company may not assign this Agreement or any interest herein without the prior written consent of the Executive and without such consent any attempted transfer or assignment shall be null and of no effect; provided, however, that the Holding Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Holding Company expressly to assume and to agree to perform this Agreement in the same manner and to the same extent that the Holding Company would have been required to perform it if no such succession had taken place. As used in this Agreement, "the Holding Company" shall mean both 4 the Holding Company as defined above and any such successor that assumes and agrees to perform this Agreement, by operation of law or otherwise. 12. ENFORCEABILITY. If any portion or provision of this Agreement shall to any extent be declared illegal or unenforceable by a court of competent jurisdiction, then the remainder of this Agreement, or the application of such portion or provision in circumstances other than those as to which it is so declared illegal or unenforceable, shall not be affected thereby, and each portion and provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law. 13. WAIVER. No waiver of any provision hereof shall be effective unless made in writing and signed by the waiving party. The failure of any party to require the performance of any term or obligation of this Agreement, or the waiver by any party of any breach of this Agreement, shall not prevent any subsequent enforcement of such term or obligation or be deemed a waiver of any subsequent breach. 14. NOTICES. Any notices, requests, demands and other communications provided for by this Agreement shall be sufficient if in writing and delivered in person or sent by registered or certified mail, postage prepaid, to the Executive at the last address the Executive has filed in writing with the Holding Company or, in the case of the Holding Company, at its main office, attention of the Board of Directors. 15. ELECTION OF REMEDIES. An election by the Executive to resign after a Change in Control under the provisions of this Agreement shall not constitute a breach by the Executive of any employment agreement the Executive may have with either Employer and shall not be deemed a voluntary termination of employment by the Executive for the purpose of interpreting the provisions of any of the Employers' benefit plans, programs or policies. Nothing in this Agreement shall be construed to limit the rights of the Executive under any employment agreement he may then have with either Employer, provided, however, that if there is a Terminating Event under Section 3 hereof, the Executive may elect either to receive the severance and other benefits provided under Section 4 and Section 5 or such termination benefits as he may have under any such employment agreement, but may not elect to receive both. 16. AMENDMENT. This Agreement may be amended or modified only by a written instrument signed by the Executive and by a duly authorized representative of the Holding Company. 17. GOVERNING LAW. This is a Massachusetts contract and shall be construed under and be governed in all respects by the laws of The Commonwealth of Massachusetts. 18. INTERPRETATION. References to Sections include subsections, which are part of the related Section (e.g., a section numbered "Section 5.5" would be part of "Section 5" and references to "Section 5" would also refer to material contained in the subsection described as "Section 5.5"). 19. COUNTERPARTS AND FACSIMILE SIGNATURES. This Agreement may be executed in two or more counterparts, all of which shall be considered one and the same agreement and shall 5 become effective when one or more counterparts have been signed by each party and delivered to the other party, it being understood that all parties need not sign the same counterpart. This Agreement may be executed by facsimile signatures. IN WITNESS WHEREOF, this Agreement has been executed as a sealed instrument by the Holding Company, by its duly authorized officer, and by the Executive, as of the date first above written. ATTEST: BENJAMIN FRANKLIN BANCORP, INC. ____________________________________ By: ___________________________________ Title: ________________________________ WITNESS: ____________________________________ _______________________________________ EXECUTIVE The undersigned hereby unconditionally guarantees the obligations of the Holding Company under the foregoing Agreement. BENJAMIN FRANKLIN BANK By: ________________________________ Title: _____________________________ 6 EX-10.3 13 b52576bfexv10w3.txt EX-10.3 FORM OF BENJAMIN FRANKIN BANK BENEFIT RESTORATION PLAN Exhibit 10.3 BENJAMIN FRANKLIN BANK BENEFIT RESTORATION PLAN (EFFECTIVE _________, 2005) . . . BENJAMIN FRANKLIN BANK BENEFIT RESTORATION PLAN TABLE OF CONTENTS PART 1. INTRODUCTION............................................................................................. 1 1.1 PURPOSE................................................................................................... 1 1.2 EFFECTIVE DATE............................................................................................ 1 PART 2. DEFINITIONS.............................................................................................. 1 2.1 401(K) PLAN............................................................................................... 1 2.2 AFFILIATE................................................................................................. 1 2.3 BANK...................................................................................................... 1 2.4 BENEFICIARY............................................................................................... 1 2.5 BOARD OF DIRECTORS........................................................................................ 1 2.6 CHANGE IN CONTROL......................................................................................... 1 2.7 CODE...................................................................................................... 2 2.8 COMMITTEE................................................................................................. 2 2.9 COMMON STOCK.............................................................................................. 2 2.10 COMPANY.................................................................................................. 2 2.11 ELIGIBLE EMPLOYEE........................................................................................ 2 2.12 EMPLOYEE................................................................................................. 2 2.13 EMPLOYER................................................................................................. 2 2.14 EMPLOYER CONTRIBUTION.................................................................................... 2 2.15 ERISA.................................................................................................... 2 2.16 ESOP..................................................................................................... 2 2.17 ESOP ACQUISITION LOAN.................................................................................... 3 2.18 ESOP ACQUISITION LOAN SHARES............................................................................. 3 2.19 ESOP VALUATION DATE...................................................................................... 3 2.20 FULL-TIME................................................................................................ 3 2.21 MEMORANDUM ACCOUNT....................................................................................... 3 2.22 PARTICIPANT.............................................................................................. 3 2.23 PLAN..................................................................................................... 3 2.24 PLAN ADMINISTRATOR....................................................................................... 3 2.25 RESTORED ESOP BENEFIT.................................................................................... 3 2.26 RETIREMENT............................................................................................... 3 2.27 STOCK UNIT............................................................................................... 3 2.28 SUPPLEMENTAL 401(K) BENEFIT.............................................................................. 3 2.29 SUPPLEMENTAL ESOP BENEFIT................................................................................ 3 2.30 TRUST.................................................................................................... 3 PART 3. PARTICIPATION............................................................................................ 4 3.1 PARTICIPATION............................................................................................. 4 3.2 FULL OR PARTIAL BENEFITS.................................................................................. 4 3.3 TERMINATION OF PARTICIPATION.............................................................................. 4 PART 4. BENEFITS................................................................................................. 4 4.1 SUPPLEMENTAL 401(K) BENEFIT............................................................................... 4 4.2 SUPPLEMENTAL ESOP BENEFIT................................................................................. 5
-i- 4.3 RESTORED ESOP BENEFIT..................................................................................... 5 4.4 CHANGE IN CONTROL......................................................................................... 6 4.5 MEMORANDUM ACCOUNT........................................................................................ 6 4.6 VESTING................................................................................................... 7 PART 5. PAYMENT.................................................................................................. 7 5.1 PAYMENT................................................................................................... 7 PART 6. DEATH BENEFITS........................................................................................... 8 6.1 DEATH BENEFITS............................................................................................ 8 6.2 BENEFICIARIES............................................................................................. 8 PART 7. CLAIMS PROCEDURES........................................................................................ 8 7.1 INITIAL CLAIM............................................................................................. 8 7.2 WRITTEN DECISION.......................................................................................... 8 7.3 DENIAL OF CLAIMS.......................................................................................... 8 7.4 REVIEW OF DENIALS OF CLAIMS............................................................................... 8 7.5 LIMITATION ON LEGAL PROCEEDINGS........................................................................... 9 PART 8. AMENDMENT AND TERMINATION................................................................................ 9 8.1 AMENDMENT AND TERMINATION OF THE PLAN..................................................................... 9 PART 9. GENERAL PROVISIONS....................................................................................... 9 9.1 UNFUNDED, UNSECURED PROMISE TO MAKE PAYMENTS IN THE FUTURE................................................ 9 9.2 COMMITTEE AS PLAN ADMINISTRATOR........................................................................... 9 9.3 EXPENSES.................................................................................................. 9 9.4 RIGHTS OF PARTICIPANTS AND BENEFICIARIES.................................................................. 10 9.5 BINDING OBLIGATION OF BANK AND ANY SUCCESSOR IN INTEREST.................................................. 10 9.6 GOVERNING LAW............................................................................................. 10
-ii- PART 1. INTRODUCTION 1.1 PURPOSE. The purpose of this Benjamin Franklin Bank Benefit Restoration Plan (the "PLAN") is to assist Benjamin Franklin Bank (the "BANK") and its "AFFILIATES" (as defined in Section 2.1 of the Plan), including Benjamin Franklin Bancorp, Inc., in retaining the services of key employees, to induce such employees to use their best efforts to enhance the business of the Bank and its Affiliates, and to provide certain supplemental retirement benefits to such employees. 1.2 EFFECTIVE DATE. The Effective Date of this Plan is [_____], 2005. PART 2. DEFINITIONS 2.1 401(k) PLAN means the SBERA 401(k) Plan as adopted by the Bank. 2.2 AFFILIATE means any corporation, trade or business, which, at the time of reference, is, together with the Bank, a member of a controlled group of corporations, a group of trades or businesses (whether or not incorporated) under common control, or an affiliated service group, as described in Sections 414(b), 414(c), and 414(m) of the Code, respectively, or any other organization treated as a single employer with the Bank under Section 414(o) of the Code; provided, however, that, where the context so requires, the term Affiliate shall be construed to give full effect to the provisions of Sections 409(1)(4) and 415(h) of the Code. 2.3 BANK means Benjamin Franklin Bank, a Massachusetts chartered savings bank with its executive offices in Franklin, Massachusetts, and its successors. 2.4 BENEFICIARY means any person (other than a Participant) who is determined to be entitled to benefits under the terms of the Plan. 2.5 BOARD OF DIRECTORS means the Board of Directors of the Bank. 2.6 CHANGE IN CONTROL means the happening of any of the following events: (a) If there has occurred a change in control which the Company would be required to report in response to Item 5.01 of Form 8-K promulgated under the Securities Exchange Act of 1934, as amended (the "1934 ACT"), or, if such regulation is no longer in effect, any regulations promulgated by the Securities and Exchange Commission pursuant to the 1934 Act which are intended to serve similar purposes; (b) When any "person" (as such term is used in Sections 13d) and 14(d)(2) of the 1934 Act) becomes a "beneficial owner" (as such term is defined in Rule 13d-3 promulgated under the 1934 Act), directly or indirectly, of securities of the Company or the Bank representing twenty-five percent (25%) or more of the total number of votes that may be cast for the election of directors of the Company or the Bank, as the case may be; (c) During any period of two consecutive years, individuals who at the beginning of such period constitute the Board of Directors of the Company, and any new director (other than a director designated by a person who has entered into an agreement with the Company to effect a transaction described in paragraphs (b), (d) or (e) of this Section 2.6)) whose election by the Board or nomination for election by the Company's stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute at least a majority of the Board of Directors of the Company; (d) The stockholders of the Company approve a merger, share exchange or consolidation ("MERGER OR CONSOLIDATION") of the Company with any other corporation, other than (x) a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 70% of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation or (y) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no "person" (as hereinabove defined) acquires more than 30% of the combined voting power of the Company's then outstanding securities; or (e) The stockholders of the Company or the Bank approve a plan of complete liquidation of the Company or the Bank or an agreement for the sale or disposition by the Company or the Bank of all or substantially all of the Company's or the Bank's assets. 2.7 CODE means the Internal Revenue Code of 1986, as amended. 2.8 COMMITTEE means the person(s) designated by the Board of Directors, pursuant to Section 9.2 of the Plan, to administer the Plan, or if no such designation is made, the Compensation Committee of the Board of Directors. 2.9 COMMON STOCK means the common stock of the Company. 2.10 COMPANY means Benjamin Franklin Bancorp, Inc. and its successors. 2.11 ELIGIBLE EMPLOYEE means Thomas R. Venables, Claire S. Bean and any other Employee of the Bank or an Affiliate who is one of a select group of management or highly compensated employees (as such phrase is used for purposes of Sections 101, 201, and 301 of ERISA). 2.12 EMPLOYEE means any person employed by the Bank or an Affiliate. 2.13 EMPLOYER means the Bank or the Affiliate that employs the Employee. 2.14 EMPLOYER CONTRIBUTION means contributions by any Employer to the ESOP. 2.15 ERISA means the Employee Retirement Income Security Act of 1974, as amended. 2.16 ESOP means the Benjamin Franklin Bank Employee Stock Ownership Plan, as amended from time to time (including the corresponding provisions of any successor qualified employee stock ownership plan adopted by the Bank or any successor to the Bank or any -2- Affiliate). 2.17 ESOP ACQUISITION LOAN means a loan or other extension of credit incurred by the trustee of the ESOP in connection with the purchase of Common Stock on behalf of the ESOP. 2.18 ESOP ACQUISITION LOAN SHARES mean shares of Common Stock acquired with the proceeds of ESOP Acquisition Loans. 2.19 ESOP VALUATION DATE means any day as of which the investment experience of the trust fund of the ESOP is determined and individuals' accounts under the ESOP are adjusted accordingly. 2.20 FULL-TIME means working at least 1,000 hours per year. 2.21 MEMORANDUM ACCOUNT means the account established by an Employer pursuant to Section 4.5 of the Plan, with respect to a Participant's Supplemental 401(k) Benefit, Supplemental ESOP Benefit and/or Restored ESOP Benefit. 2.22 PARTICIPANT means Thomas R. Venables, Claire S. Bean and any other Eligible Employee who is entitled to benefits under the Plan by reason of having been designated a Participant by the Board of Directors pursuant to Part 3 of the Plan. 2.23 PLAN means this Benjamin Franklin Bank Benefit Restoration Plan. 2.24 PLAN ADMINISTRATOR means the Committee. 2.25 RESTORED ESOP BENEFIT means the benefit credited to a Participant's Memorandum Account pursuant to Section 4.3 and, if applicable, Section 4.4 of the Plan. 2.26 RETIREMENT means the first to occur of the following: (i) termination of employment at any time following satisfaction of the requirements for early or normal retirement under the ESOP, or as otherwise permitted by the Board of Directors; (ii) death while employed as a Full-Time Employee by the Bank, the Company or any other Affiliate of the Bank; or (iii) the occurrence of a Change in Control regardless of whether the Participant continues in the employ of the Employer or any successor following the Change in Control. 2.27 STOCK UNIT means a right to receive a payment under the Plan in an amount equal (determined as of the date on which such payment is to be made) to the Fair Market Value of a share of Common Stock. 2.28 SUPPLEMENTAL 401(k) BENEFIT means the benefit credited to a Participant's Memorandum Account pursuant to Section 4.1 of the Plan. 2.29 SUPPLEMENTAL ESOP BENEFIT means the benefit credited to a Participant's Memorandum Account pursuant to Section 4.2 of the Plan. 2.30 TRUST shall mean a Trust Agreement established by the Bank as required by Section 5.1, which substantially conforms to the terms of the model trust prescribed by Revenue Procedure 92-64, as the same may be modified from time to time. -3- PART 3. PARTICIPATION 3.1 PARTICIPATION. Thomas R. Venables and Claire S. Bean shall be the initial Participants in this Plan. The Board of Directors may from time to time designate one or more additional Eligible Employees as Participants in the Plan. No additional Eligible Employee shall be a Participant unless and until he or she has been explicitly designated as a Participant by the Board of Directors. The Board of Directors shall give written notice to the Eligible Employee of his or her selection to participation by the Board. 3.2 FULL OR PARTIAL BENEFITS. The Board of Directors may designate an Eligible Employee as a Participant with respect to any or all benefits provided for under Part 4 of the Plan. Thomas R. Venables and Claire S. Bean have been designed as Participants with respect to all benefits. 3.3 TERMINATION OF PARTICIPATION. Participation in the Plan shall cease on the earliest of (i) the date of the Participant's termination of Full-Time employment with an Employer, (ii) the date on which he or she ceases to be an Eligible Employee, as determined by the Board of Directors or (iii) a vote by the Board of Directors to terminate the Participant's participation in the Plan. A Participant shall not be deemed to have terminated Full-Time employment until he or she is no longer employed on a Full-Time basis by any of the Bank, the Company or any other Affiliate of the Bank. PART 4. BENEFITS 4.1 SUPPLEMENTAL 401(k) BENEFIT. A participant whose employer matching contribution benefits under the 401(k) Plan are limited by Sections 401(a)(17) and/or 415 of the Code shall be entitled to receive, pursuant to the provisions of Sections 4.4 and 5.1, a Supplemental 401(k) Benefit in an amount equal to: (a) the aggregate amount of employer matching contributions that would have been credited to the Participant's account under the 401(k) Plan if for all periods while a Participant in this Plan the Participant had made the maximum amount of pre-tax elective deferrals required to qualify for the maximum possible allocation of employer matching contributions (computed without regard to any limitations applicable to tax-qualified plans that have the effect of limiting the amount of employer matching contributions or pre-tax elective deferrals that may be made and without regard to the amount of elective deferrals actually made); less (b) the aggregate amount of employer matching contributions that would have been credited to the Participant's account under the 401(k) Plan (after giving effect to any limitations applicable to tax-qualified plans that have the effect of limiting the amount of employer matching contributions or pre-tax elective deferrals that may be made) if for all periods while a Participant in this Plan the Participant had made the maximum amount of pre-tax elective deferrals required to qualify for the maximum possible allocation of employer matching contributions (and without regard to the amount of pre-tax elective deferrals actually made). -4- 4.2 SUPPLEMENTAL ESOP BENEFIT. (a) A Participant whose benefits under the ESOP are limited by Sections 401(a)(17) and/or 415 of the Code shall be entitled to receive, pursuant to the provisions of Sections 4.5 and 5.1, a Supplemental ESOP Benefit under the Plan in an amount equal to the sum of: (1) a number of Stock Units equal to the excess (if any) of (A) the aggregate number of all shares of Common Stock that would have been credited to the Participant's account under the ESOP if the provisions of the ESOP had been administered without regard to the limitations imposed by Sections 401(a)(17) and/or 415 of the Code over (B) the number of shares of Common Stock actually credited to his account under the ESOP; plus (2) if and to the extent that Employer Contributions to the ESOP result in allocations to the Participant's account of assets other than Common Stock, an amount equal to the excess (if any) of (A) the aggregate amount of all such Employer Contributions that would have been credited to the Participant's account under the ESOP if the provisions of the ESOP were administered without regard to the limitations imposed by Sections 401(a)(17) and/or 415 of the Code over (B) the aggregate amount of such Employer Contributions actually credited to the Participant's account under the ESOP, adjusted for earnings and losses as provided Section 4.5; (b) In calculating the number of shares of Common Stock or the amount of Employer Contributions that would have been allocated to the Participant's account for purposes of Sections 4.2(a)(1) and 4.2(a)(2), any reallocations of amounts forfeited upon the termination of employment of other Employees participating in the ESOP shall be included. (c) The amount of any Supplemental ESOP Benefit under this Section 4.1 shall be credited to the Participant's Memorandum Account pursuant to Section 4.5, and payment of such benefit shall be made pursuant to the provisions of Part 5 below. 4.3 RESTORED ESOP BENEFIT. (a) Upon Retirement, as defined at Section 2.26, a Participant shall be entitled to receive a Restored ESOP Benefit equal to the number of Stock Units determined by projecting the total number of (i) additional ESOP Acquisition Loan Shares (with each such Loan Share equal to one Stock Unit) that would have been allocated to the Participant's ESOP account under the terms of the ESOP, plus (ii) additional Stock Units that would have been allocated to the Participant's Memorandum Account pursuant to the provisions of Section 4.2, had the Participant continued in the employ of the Employer until the date that the ESOP Acquisition Loan is scheduled to be repaid in full and the final allocation of ESOP Acquisition Loan Shares is to be made; (b) The calculation of Restored ESOP Benefit required by Section 4.3(a) shall be determined as follows: -5- (1) If the ESOP Acquisition Loan is an equal amortization loan, by: calculating the sum of (i) the average annual number of ESOP Acquisition Loan Shares that were allocated for the benefit of the Participant under the ESOP as of the three most recent plan years of the ESOP preceding the Participant's Retirement, plus (ii) the average annual number of Stock Units credited to the Participant's Memorandum Account pursuant to Section 4.1 for the three most recent plan years of the ESOP and by multiplying the sum obtained in the foregoing calculation by (i) the remaining number of scheduled annual payments on the ESOP Acquisition Loans as of the date of Retirement. (2) If the ESOP Acquisition Loan is not an equal amortization loan, such calculations shall be determined by legal counsel (selected by the Bank) based on assumptions which the Committee has approved as reasonable at the time the calculation of benefits is performed. (c) The amount of any Restored ESOP Benefit under this Section 4.3 (calculated as a number of Stock Units) shall be credited to the Participant's Memorandum Account pursuant to Section 4.5, and payment of such benefit shall be made pursuant to the provisions of Part 5 below. 4.4 CHANGE IN CONTROL. Upon the occurrence of a Change in Control, the following shall occur: (a) A Participant's Retirement shall be deemed to have occurred as of the effective date of the Change in Control (which date shall be determined by the Board of Directors), regardless of whether the Participant has satisfied the conditions for retirement under the ESOP and regardless of whether the Participant continues in the employ of the Employer or any successor following the Change in Control; (b) Because the Participant shall be considered to have Retired as of the effective date of the Change in Control, as of such date the Participant shall be entitled to receive a Restored ESOP Benefit, calculated as of the effective date of the Change in Control; and (c) The amount of such Restored ESOP Benefit shall be credited to the Participant's Memorandum Account as of the effective date of the Change in Control. 4.5 MEMORANDUM ACCOUNT. The Employer shall establish, as a memorandum account on its books, a separate Memorandum Account for each Participant in the Plan. Amounts shall be credited to a Participant's Memorandum Account in accordance with this Section 4.5. The Employer shall not have any obligation to fund its liability for the balances credited to a Memorandum Account. -6- (a) SUPPLEMENTAL 401(k) BENEFIT. From time to time, but in no event less frequently than monthly, the Committee shall credit to the Participant's Memorandum Account an amount equal to the net increase in the value of the Supplemental 401(k) Benefit since the date on which an amount was last credited to such Participant's Memorandum Account pursuant to this Section 4.5(a), as determined pursuant to Section 4.1 of the Plan. (b) SUPPLEMENTAL ESOP BENEFIT. At the same time as shares of Common Stock and any other assets are allocated to the ESOP Accounts of Participants under the terms of the ESOP, the Committee shall credit to the Participant's Memorandum Account the amount of Stock Units and Employer Contributions determined pursuant to Section 4.2 of the Plan. (c) RESTORED ESOP BENEFIT. Promptly after a Participant's Retirement (as such term is defined in Section 2.26), the Committee shall credit to the Participant's Memorandum Account the amount of Restored ESOP Benefit Stock Units determined pursuant to Section 4.3 and (if applicable) Section 4.4 of the Plan. (d) VALUATION ISSUES. Stock Units shall be treated as shares of Common Stock and valued as shares of Common Stock are valued under the ESOP. To the extent that any dividends are paid with respect to Common Stock, such dividends shall be deemed to have been paid with regard to the Stock Units and Participants' Memorandum Accounts shall be adjusted accordingly. Cash and other (non-stock) contributions credited to a Participant's Memorandum Account shall be credited annually with interest at a rate equal to [ADD INTEREST RATE]. 4.6 VESTING. All amounts credited to a Participant's Memorandum Account shall be 100% vested at all times. PART 5. PAYMENT 5.1 PAYMENT. As soon as is practicable following the last day of the calendar year in which the Participant ceases to be a Full-Time employee of the Bank or any Affiliate, the Employer shall pay to such Participant a single lump sum in cash in an amount equal to the balance in the Participant's Memorandum Account; provided, however, that if such termination of employment occurs in connection with a Change in Control, payment shall be made within ten business days after the termination of employment. Notwithstanding the foregoing, to the extent then required by applicable law, no payment shall be made earlier than a date that is at least six months after the date of termination of employment. If the Participant's employment terminates as a result of death, the amount otherwise payable to him pursuant to this Section 5.1 shall be paid to his Beneficiary at the time specified pursuant to Section 6.1. If the Participant is to continue in the employ of the Employer or any successor following a Change in Control (and if the Participant so requests), the Bank shall (as soon as possible, but in no event later than 30 days after the Change in Control) establish and make an irrevocable contribution to the Trust (and the Bank agrees to establish the Trust with a trustee reasonably acceptable to the Participant promptly upon request of the Participant) in an amount equal to the balance in such Participant's Memorandum Account. -7- PART 6. DEATH BENEFITS 6.1 DEATH BENEFITS. If a Participant who is eligible for any benefits under Part 4 dies before full payment of such benefit, any remaining unpaid benefit amount shall be paid to the Participant's Beneficiary in a single lump payment not later than thirty days following the death of the Participant. 6.2 BENEFICIARIES. A Participant may designate a Beneficiary or Beneficiaries to receive any benefits payable under the Plan upon his or her death. Any such designation, or change therein or revocation thereof, shall be made in writing in the form and manner prescribed by the Committee, shall be revocable until the death of the Participant, and shall thereafter be irrevocable; provided, however, that any change or revocation shall be effective only if received by the Committee prior to the Participant's death. If a Participant dies without having effectively named a Beneficiary, he or she shall be deemed to have named his or her estate as sole Beneficiary. PART 7. CLAIMS PROCEDURES 7.1 INITIAL CLAIM. An initial claim for benefits under the Plan must be made by the Participant or his or her Beneficiary or Beneficiaries in accordance with the terms of this Part 7. 7.2 WRITTEN DECISION. Not later than ninety (90) days after receipt of such a claim, the Plan Administrator will render a written decision on the claim to the claimant, unless special circumstances require the extension of such 90-day period. If such extension is necessary, the Plan Administrator shall provide the Participant or the Participant's Beneficiary with written notification of such extension before the expiration of the initial 90-day period. Such notice shall specify the reason or reasons for the extension and the date by which a final decision can be expected. In no event shall such extension exceed a period of ninety (90) days from the end of the initial 90-day period. 7.3 DENIAL OF CLAIMS. In the event the Plan Administrator denies the claim of a Participant or any Beneficiary in whole or in part, the Plan Administrator's written notification shall specify, in a manner calculated to be understood by the claimant, the reason for the denial; a reference to the Plan or other document or form that is the basis for the denial; a description of any additional material or information necessary for the claimant to perfect the claim; an explanation as to why such information or material is necessary; and an explanation of the applicable claims procedure. 7.4 REVIEW OF DENIALS OF CLAIMS. Should the claim be denied in whole or in part and should the claimant be dissatisfied with the Plan Administrator's disposition of the claim, the claimant may have a full and fair review of the claim by the Committee upon written request submitted by the claimant or the claimant's duly authorized representative and received by the Committee within sixty (60) days after the claimant receives written notification that the claimant's claim has been denied. In connection with such review, the claimant or the claimant's duly authorized representative shall be entitled to review pertinent documents and submit the claimant's views as to the issues, in writing. The Committee shall act to deny or accept the claim within sixty (60) days after receipt of the claimant's written request for review unless special circumstances require the extension of such 60-day period. If such extension is necessary, the -8- Committee shall provide the claimant with written notification of such extension before the expiration of such initial 60-day period. In all events, the Committee shall act to deny or accept the claim within 120 days of the receipt of the claimant's written request for review. The action of the Committee shall be in the form of a written notice to the claimant and its contents shall include all of the requirements for action on the original claim. 7.5 LIMITATION ON LEGAL PROCEEDINGS. In no event may a claimant commence legal action for benefits the claimant believes are due the claimant until the claimant has exhausted all of the remedies and procedures afforded the claimant by this Part 7. PART 8. AMENDMENT AND TERMINATION 8.1 AMENDMENT AND TERMINATION OF THE PLAN. The Bank may at any time, in its sole and absolute discretion, amend or terminate the Plan in whole or in part; provided, however, that such amendment or termination may not adversely affect the rights of any Participant or Beneficiary with respect to any benefit under the Plan to which the Participant or Beneficiary may have previously become entitled (including but not limited to any amounts credited to the Participant's Memorandum Account) prior to the effective date of such amendment or termination without the consent of the Participant or Beneficiary. Upon termination of the Plan, any amounts credited to the Memorandum Accounts of Participants shall remain subject to the provisions of the Plan and no distribution of benefits shall be accelerated because of termination of the Plan. The Committee shall be authorized to make minor or administrative changes to the Plan, as well as amendments required by applicable federal or state law (or authorized or made desirable by such statutes); provided, however, that such amendments must subsequently be ratified by the Board of Directors. PART 9. GENERAL PROVISIONS 9.1 UNFUNDED, UNSECURED PROMISE TO MAKE PAYMENTS IN THE FUTURE. The right of a Participant or Beneficiary to receive a distribution under this Plan shall be an unsecured claim against the general assets of the Bank or its Affiliates and neither a Participant nor a Beneficiary shall have any rights in or against any amount credited to any account under this Plan or any other assets of the Bank or an Affiliate. The Plan at all times shall be considered entirely unfunded both for tax purposes and for purposes of Title I of ERISA. 9.2 COMMITTEE AS PLAN ADMINISTRATOR. The Plan shall be administered by the Committee designated by the Board of Directors. The Committee shall have the authority, duty and power to interpret and construe the provisions of the Plan as it deems appropriate. The Committee shall have the duty and responsibility of maintaining records, making the requisite calculations and disbursing the payments hereunder. In addition, the Committee shall have the authority and power to delegate any of its administrative duties to employees of the Bank or Affiliate, as they may deem appropriate. The Committee shall be entitled to rely on all tables, valuations, certificates, opinions, data and reports furnished by any actuary, accountant, controller, counsel or other person employed or retained by the Bank with respect to the Plan. The interpretations, determination, regulations and calculations of the Committee shall be final and binding on all persons and parties concerned. -9- 9.3 EXPENSES. Expenses of administration of the Plan shall be paid by the Bank or an Affiliate. 9.4 RIGHTS OF PARTICIPANTS AND BENEFICIARIES. (a) The sole rights of a Participant or Beneficiary under this Plan shall be to have this Plan administered according to its provisions, and to receive whatever benefits he or she may be entitled to hereunder. (b) Nothing in the Plan shall be interpreted as a guaranty that any funds in any trust which may be established in connection with the Plan or assets of the Bank or an Affiliate will be sufficient to pay any benefit hereunder. (c) The adoption and maintenance of this Plan shall not be construed as creating any contract of employment or service between the Bank or an Affiliate and any Participant or other individual. The Plan shall not affect the right of the Bank or an Affiliate to deal with any Participants in employment or service respects, including their hiring, discharge, compensation, and conditions of employment or other service. 9.5 BINDING OBLIGATION OF BANK AND ANY SUCCESSOR IN INTEREST. The Plan shall bind the Bank and any successor. The Bank expressly agrees that it shall not merge or consolidate into or with another bank or sell substantially all of its assets to another bank, firm or person until such bank, firm or person expressly agrees, in writing, to assume and discharge the duties and obligations of the Bank under this Plan. 9.6 GOVERNING LAW. All questions pertaining to the construction, validity and effect of the Plan shall be determined in accordance with the laws of the United States and to the extent not preempted by such laws, by the laws of The Commonwealth of Massachusetts. Benjamin Franklin Bank has adopted this Plan, to be executed by a designee of the Board and duly attested, on [_____], 2005. ATTEST: BENJAMIN FRANKLIN BANK ____________________________________ _______________________________________ For the Entire Board of Directors -10- EX-10.4.1 14 b52576bfexv10w4w1.txt EX-10.4.1 BENJAMIN FRANKLIN BANK SALARY CONTINUATION AGREEMENT WITH THOMAS R. VENABLES EXHIBIT 10.4.1 August 22, 2002 BENJAMIN FRANKLIN SAVINGS BANK SALARY CONTINUATION AGREEMENT THIS AGREEMENT is adopted this 22nd day of August, 2002, by and between BENJAMIN FRANKLIN SAVINGS BANK, a state-chartered bank located in Franklin, Massachusetts along with its holding company, BENJAMIN FRANKLIN BANCORP M.H.C. (collectively the "COMPANY"), and THOMAS R. VENABLES (the "EXECUTIVE"). INTRODUCTION To encourage the Executive to remain an employee of the Company, the Company is willing to provide salary continuation benefits to the Executive. The Company will pay the benefits from its general assets. AGREEMENT The Company and the Executive agree as follows: ARTICLE 1. DEFINITIONS Whenever used in this Agreement, the following words and phrases shall have the meanings specified: 1.1. ACTUARIAL EQUIVALENT shall mean a benefit of equivalent current value to the benefit which could otherwise have been provided to the Executive, computed on the basis of the discount rates, mortality tables and other assumptions then being used by SBERA in determining the actuarial equivalent of payments being made by SBERA to its Retirement Plan beneficiaries. 1.2. "CHANGE OF CONTROL" means (a) a reorganization, merger, consolidation or other form of corporate transaction or series of transactions, other than a merger or consolidation in which individuals who are directors of the Company immediately prior to the transaction will continue to represent at least two-thirds of the directors of the institution resulting from the merger or consolidation, or (b) a liquidation or dissolution of the Company, or (c) the sale of more than 50% of the assets of the Company to any person or entity not controlled by or under common control with the Company (unless such reorganization, merger, consolidation or other corporate transaction, liquidation, dissolution or sale is subsequently abandoned). 1.3. "CODE" means the Internal Revenue Code of 1986, as amended. 1.4. "DISABILITY" means the Executive's suffering a sickness, accident or injury to such an extent that he is receiving long-term benefits from the carrier of any individual or group disability insurance policy covering the Executive, or from the Social Security Administration. The Executive must submit proof to the Company of the carrier's or Social Security Administration's determination upon the request of the Company. 1.5. "EFFECTIVE DATE" means June 1, 2002. 1.6. "FINAL PAY" means the reported total pay (total W-2 compensation, including bonuses, if any) paid to the Executive by the Company for the last full calendar year. Final Pay shall be increased by the amount of any pay reduction contributions (i) to cash or deferred arrangements under Section 401(k) of the Code, (ii) to a cafeteria plan under Section 125 of the Code, or (iii) to a nonqualified deferred compensation plan. Final Pay shall not be increased by any reimbursed expenses, credits or benefits under any plan of deferred compensation to which the Company contributes, or any additional cash compensation or compensation payable in a form other than cash. 1.7. "INVOLUNTARY EARLY TERMINATION" means any termination, prior to Normal Retirement Age, of the Executive's employment with the Company for reasons other than an approved leave of absence, Termination for Specially-Defined Cause (as defined in Article 5.1), Disability, Voluntary Early Termination or Death. 1.8. "NORMAL RETIREMENT AGE" means the Executive's 65th birthday. 1.9. "NORMAL RETIREMENT DATE" means the later of the Normal Retirement Age or the date on which Termination of Employment, as defined below, occurs. 1.10. "TERMINATION OF EMPLOYMENT" means that the Executive ceases to be employed by the Company for any reason, voluntary or involuntary, other than by reason of a leave of absence approved by the Company. 1.11. "VOLUNTARY EARLY TERMINATION" means that the Executive, prior to Normal Retirement Age, has terminated employment with the Company for reasons other than Termination for Specially-Defined Cause, Disability, Involuntary Early Termination, Death or leave of absence approved by the Company. ARTICLE 2. LIFETIME BENEFITS 2.1. NORMAL RETIREMENT BENEFIT. Upon Termination of Employment on or after the Normal Retirement Age for reasons other than death, the Company shall pay to the Executive the benefit described in this Section 2.1 in lieu of any other benefit under this Agreement. 2.1.1 AMOUNT OF BENEFIT. The annual amount of the Normal Retirement Benefit under this Section 2.1 is 75 percent of the Executive's Final Pay, as defined in Section 1.6, at the Normal Retirement Date, less the following: (a) SOCIAL SECURITY BENEFITS. The amount of annual unreduced primary (not family) retirement benefits under the United States Social Security Act, but only if the Executive would be eligible for Social Security Benefits if application - 2 - were made as of the Executive's Normal Retirement Date, assuming that the Executive had earnings at or above the maximum contribution and benefit base under Section 230 of the United States Social Security Act for the Executive's working career; and (b) COMPANY QUALIFIED PLAN BENEFITS. The annual annuity benefit the Executive would be entitled to receive from the Company's contribution to the Executive's 401(k) plan as of the Executive's Termination of Employment. 2.1.2 PAYMENT OF BENEFIT. The Company shall pay the Normal Retirement Benefit determined in Section 2.1.1 to the Executive in 12 equal monthly installments commencing with the month following the Executive's Normal Retirement Date, paying the Normal Retirement Benefit to the Executive for a period of 20 years. 2.1.3 BENEFIT INCREASES. Commencing on the first anniversary of the first benefit payment, and continuing on each subsequent anniversary, the Company's Board of Directors, at its sole discretion, may increase the benefit. 2.2 VOLUNTARY EARLY TERMINATION BENEFIT. Upon a Voluntary Early Termination, the Company shall pay to the Executive the benefit described in this Section 2.2 in lieu of any other benefit under this Agreement. 2.2.1 AMOUNT OF BENEFIT. The Voluntary Early Termination Benefit is the dollar amount equal to the liability then accrued on the books of the Company for the costs of benefits payable pursuant to the provisions of this Agreement, which shall be reported to the Executive on an annual basis by the Company. 2.2.2 PAYMENT OF BENEFIT. The Company shall pay the Voluntary Early Termination Benefit to the Executive in a lump sum within 30 days following Voluntary Early Termination. However, if such Voluntary Early Termination occurs after a Change of Control, the lump sum benefit under this Section 2.2 shall be payable at the Normal Retirement Age. The Executive may petition the Company to pay this benefit in another manner and the Company, in its sole discretion, may accept or deny said petition. 2.3 INVOLUNTARY EARLY TERMINATION BENEFIT. Upon an Involuntary Early Termination, the Company shall pay to the Executive the benefit described in this Section 2.3 in lieu of any other benefit under this Agreement. 2.3.1 AMOUNT OF BENEFIT. The Involuntary Early Termination Benefit is the present value of the stream of payments of the amount the Executive would have received as the Normal Retirement Benefit set forth in Section 2.1.1, assuming that the Executive had remained employed by the Company until the Normal Retirement Age and that the Executive's Final Pay would have increased five percent (5%) per year from Involuntary Early Termination to the Normal Retirement Age. 2.3.2 PAYMENT OF BENEFIT. The Company shall pay the Involuntary Early - 3 - Termination Benefit to the Executive in a lump sum at the Normal Retirement Age. The Executive may petition the Company to pay this benefit in another manner and the Company, in its sole discretion, may accept or deny said petition. 2.4 DISABILITY BENEFIT. If the Executive or the Company terminates employment due to Disability prior to Normal Retirement Age, the Company shall pay to the Executive the benefit described in this Section 2.4 in lieu of any other benefit under this Agreement. 2.4.1 AMOUNT OF BENEFIT. The annual amount of the Disability Benefit is the Normal Retirement Benefit set forth in Section 2.1.1, assuming that the Executive's Final Pay would have increased five percent (5%) per year from Termination of Employment due to Disability to the Normal Retirement Age. 2.4.2 PAYMENT OF BENEFIT. The Company shall pay the Disability Benefit to the Executive in 12 equal monthly installments commencing with the month following the Normal Retirement Age, paying the Disability Benefit determined to the Executive for a period of 20 years. The Executive may petition the Company to pay this benefit in another manner and the Company, in its sole discretion, may accept or deny said petition. 2.4.3 BENEFIT INCREASES. Benefit payments may be increased as provided in Section 2.1.3. 2.5 If the Executive's employment terminates before the Executive's Normal Retirement Age, the Executive may elect to request the Board to permit early payment of the benefit. If the Executive so elects and the Board consents, he may commence to receive the Actuarial Equivalent of such benefit at an earlier date. In the event that the Executive requests permission to commence receiving the Actuarial Equivalent of his benefit before his Normal Retirement Age and the Board has not agreed to permit such early payment by a date which is thirty (30) days after the election was made, the Executive may request the Board to reconsider its decision. If the Board has not agreed to permit such early payment by a date which is thirty (30) days after the request for reconsideration was made, the Executive shall have the right to receive upon written application to the Company the Actuarial Equivalent of such benefit, less a penalty of 7%. ARTICLE 3. DEATH BENEFITS 3.1 DEATH DURING ACTIVE SERVICE. If the Executive dies while in the active service of the Company, the Company shall pay to the Executive's beneficiary the benefit described in this Section 3.1. This benefit shall be paid in lieu of the benefits under Article 2. 3.1.1 AMOUNT OF BENEFIT. The annual amount of the Death Benefit under this Section 3.1 is the Normal Retirement Benefit amount described in Section 2.1.1, assuming that the Executive's Final Pay would have increased five percent (5%) per year from the Executive's death to the Normal Retirement Age. 3.1.2 PAYMENT OF BENEFIT. The Company shall pay the Death Benefit to the - 4 - Executive's beneficiary in 12 equal monthly installments commencing with the month following the Executive's death, paying the Death Benefit to the Executive's beneficiary for a period of 20 years. The Executive's beneficiary may petition the Company in accordance with the provisions of Section 2.5 to pay the present value of this death benefit in a lump sum. 3.2 DEATH DURING PAYMENT OF A LIFETIME BENEFIT. If the Executive dies after any Lifetime Benefit payments have commenced under Article 2 of this Agreement but before receiving all such payments, the Company shall pay the remaining benefits to the Executive's beneficiary at the same time and in the same amounts they would have been paid to the Executive had the Executive survived. 3.2 DEATH AFTER TERMINATION OF EMPLOYMENT BUT BEFORE PAYMENT OF A LIFETIME BENEFIT COMMENCES. If the Executive is entitled to a Lifetime Benefit under Article 2 of this Agreement, but dies prior to the commencement of said benefit payments, the Company shall pay the same benefit payments to the Executive's beneficiary that the Executive was entitled to prior to death except that the benefit payments shall commence on the first day of the month following the date of the Executive's death. ARTICLE 4. BENEFICIARIES 4.1 BENEFICIARY DESIGNATIONS. The Executive shall designate a beneficiary by filing a written designation with the Company. The Executive may revoke or modify the designation at any time by filing a new designation. However, designations will only be effective if signed by the Executive and received by the Company during the Executive's lifetime. The Executive's beneficiary designation shall be deemed automatically revoked if the beneficiary predeceases the Executive, or if the Executive names a spouse as beneficiary and the marriage is subsequently dissolved. If the Executive dies without a valid beneficiary designation, all payments shall be made to the Executive's estate. 4.2 FACILITY OF PAYMENT. If a benefit is payable to a minor, to a person declared incompetent, or to a person incapable of handling the disposition of his or her property, the Company may pay such benefit to the guardian, legal representative or person having the care or custody of such minor, incompetent person or incapable person. The Company may require proof of incompetence, minority or guardianship as it may deem appropriate prior to distribution of the benefit. Such distribution shall completely discharge the Company from all liability with respect to such benefit. ARTICLE 5. GENERAL LIMITATIONS 5.1 TERMINATION FOR SPECIALLY-DEFINED CAUSE. Notwithstanding any provision of this Agreement to the contrary, the Company shall not pay any benefit under this Agreement if the Company terminates the Executive's employment for: - 5 - (a) The willful and continued failure by the Executive to substantially perform his duties with the Company (other than any such failure resulting from incapacity due to physical or mental illness), after a demand for specific performance is delivered to the Executive by the Board which identifies individual goals and objectives which must be accomplished to remedy the Executive's performance, as well as provides rationale as to the reason the Board believes that he has not historically substantially performed his duties; (b) Commission of a felony or of a gross misdemeanor involving moral turpitude; or (c) Fraud, dishonesty or willful violation of any law or significant Company policy committed in connection with the Executive's employment and resulting in an adverse effect on the Company. For purposes of this paragraph, no act, or failure to act, on the Executive's part shall be considered "willful" unless done, or omitted to be done, by him not in good faith and without reasonable belief that his action or omission was in the best interest of the Company. Notwithstanding the foregoing, the Executive shall not be deemed to have been terminated for Specially-Defined Cause unless and until there have been delivered to him a copy of a resolution duly adopted by the affirmative vote of not less than two-thirds (2/3) of the entire authorized membership of the Board at a meeting of the Board called and held for the purpose (after reasonable notice and an opportunity for the Executive, together with counsel, to be heard before the Board), finding that in the good faith opinion of the Board he was guilty of conduct set forth above in clauses 5.1 (a), (b) or (c) and specifying the particulars thereof in detail. 5.2 SUICIDE OR MISSTATEMENT. The Company shall not pay any benefit under this Agreement if the Executive commits suicide within three years after the date of this Agreement. In addition, the Company shall not pay any benefit under this Agreement if the Executive has made any material misstatement of fact on an employment application or resume provided to the Company, or on any application for any benefits provided by the Company to the Executive. 5.3 COMPETITION AFTER TERMINATION OF EMPLOYMENT. The Company shall not pay any benefit under this Agreement if the Executive, without the prior written consent of the Company, engages in, becomes interested in, directly or indirectly, as a sole proprietor, as a partner in a partnership, or as a substantial shareholder in a corporation, or becomes associated with, in the capacity of employee, director, officer, principal, agent, trustee or in any other capacity whatsoever, any enterprise headquartered in the town of Franklin, Massachusetts or any town contiguous to Franklin, Massachusetts, which is, or may deemed to be, competitive with any business carried on by the Company as of the date of termination of the Executive's employment or retirement. This section shall not apply following an Involuntary Early Termination or after a Change of Control. - 6 - ARTICLE 6. CLAIMS AND REVIEW PROCEDURE 6.1 CLAIMS PROCEDURE. An Executive or beneficiary ("CLAIMANT") who has not received benefits under the Agreement that he or she believes should be paid shall make a claim for such benefits as follows: 6.1.1 INITIATION - WRITTEN CLAIM. The claimant initiates a claim by submitting to the Company a written claim for the benefits. 6.1.2 TIMING OF COMPANY RESPONSE. The Company shall respond to such claimant within 45 days after receiving the claim. If the Company determines that special circumstances require additional time for processing the claim, the Company can extend the response period by an additional 45 days by notifying the claimant in writing, prior to the end of the initial 45-day period, that an additional period is required. The notice of extension must set forth the special circumstances and the date by which the Company expects to render its decision. 6.1.3 NOTICE OF DECISION. If the Company denies part or all of the claim, the Company shall notify the claimant in writing of such denial. The Company shall write the notification in a manner calculated to be understood by the claimant. The notification shall set forth: (a) The specific reasons for the denial; (b) A reference to the specific provisions of the Agreement on which the denial is based; (c) A description of any additional information or material necessary for the claimant to perfect the claim and an explanation of why it is needed; (d) An explanation of the Agreement's review procedures and the time limits applicable to such procedures; and (d) A statement of the claimant's right to bring a civil action under ERISA Section 502(a) following an adverse benefit determination on review. 6.2 REVIEW PROCEDURE. If the Company denies part or all of the claim, the claimant shall have the opportunity for a full and fair review by the Company of the denial, as follows: 6.2.1 INITIATION - WRITTEN REQUEST. To initiate the review, the claimant, within 60 days after receiving the Company's notice of denial, must file with the Company a written request for review. 6.2.2 ADDITIONAL SUBMISSIONS - INFORMATION ACCESS. The claimant shall then have the opportunity to submit written comments, documents, records and other information relating to the claim. The Company shall also provide the claimant, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant (as defined in applicable ERISA regulations) to the claimant's claim for benefits. - 7 - 6.2.3 CONSIDERATIONS ON REVIEW. In considering the review, the Company shall take into account all materials and information the claimant submits relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination. 6.2.4 TIMING OF COMPANY RESPONSE. The Company shall respond in writing to such claimant within 45 days after receiving the request for review. If the Company determines that special circumstances require additional time for processing the claim, the Company can extend the response period by an additional 45 days by notifying the claimant in writing, prior to the end of the initial 45-day period, that an additional period is required. The notice of extension must set forth the special circumstances and the date by which the Company expects to render its decision. 6.2.5 NOTICE OF DECISION. The Company shall notify the claimant in writing of its decision on review. The Company shall write the notification in a manner calculated to be understood by the claimant. The notification shall set forth: (a) The specific reasons for the denial; (b) A reference to the specific provisions of the Agreement on which the denial is based; (c) A statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant (as defined in applicable ERISA regulations) to the claimant's claim for benefits; and (d) A statement of the claimant's right to bring a civil action under ERISA Section 502(a). ARTICLE 7. AMENDMENTS AND TERMINATION This Agreement may be amended or terminated only by a written agreement signed by the Company and the Executive. ARTICLE 8. MISCELLANEOUS 8.1 BINDING EFFECT. This Agreement shall bind the Executive and the Company, and their beneficiaries, survivors, executors, successors, administrators and transferees. 8.2 NO GUARANTEE OF EMPLOYMENT. This Agreement is not an employment policy or contract. It does not give the Executive the right to remain an employee of the Company, nor does it interfere with the Company's right to discharge the Executive. It also does not require the Executive to remain an employee nor interfere with the Executive's right to terminate employment at any time. - 8 - 8.3 NON-TRANSFERABILITY. Benefits under this Agreement cannot be sold, transferred, assigned, pledged, attached or encumbered in any manner. 8.4 REORGANIZATION. The Company shall not merge or consolidate into or with another company, or reorganize, or sell substantially all of its assets to another company, firm, or person unless such succeeding or continuing company, firm, or person agrees to assume and discharge the obligations of the Company under this Agreement. Upon the occurrence of such event or upon a Change of Control, the term "COMPANY" as used in this Agreement shall be deemed to refer to the successor or survivor company. 8.5 TAX WITHHOLDING. The Company shall withhold any taxes that are required to be withheld from the benefits provided under this Agreement. 8.6 APPLICABLE LAW. The Agreement and all rights hereunder shall be governed by the laws of the Commonwealth of Massachusetts, except to the extent preempted by the laws of the United States of America. 8.7 UNFUNDED ARRANGEMENT. The Executive and beneficiary are general unsecured creditors of the Company for the payment of benefits under this Agreement. The benefits represent the mere promise by the Company to pay such benefits. The rights to benefits are not subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or garnishment by creditors. Any insurance on the Executive's life is a general asset of the Company to which the Executive and beneficiary have no preferred or secured claim. 8.8 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement between the Company and the Executive as to the subject matter hereof. No rights are granted to the Executive by virtue of this Agreement other than those specifically set forth herein. 8.9 ADMINISTRATION. The Company shall have powers which are necessary to administer this Agreement, including but not limited to: (a) Establishing and revising the method of accounting for the Agreement; (b) Maintaining a record of benefit payments; and (c) Establishing rules and prescribing any forms necessary or desirable to administer the Agreement. 8.10 NAMED FIDUCIARY. The Company shall be the named fiduciary and plan administrator under this Agreement. It may delegate to others certain aspects of the management and operational responsibilities including the employment of advisors and the delegation of ministerial duties to qualified individuals. 8.11 RABBI TRUST. Upon a Change of Control, the Company shall, as soon as possible, but in no event later than 30 days following the Change of Control, make an irrevocable contribution to a trust (the "Rabbi Trust") in an amount that is sufficient, as determined by an actuary appointed by the trustee of the Rabbi Trust (the "Trustee"), to pay the Executive or his - 9 - beneficiary the full benefits to which he would be entitled pursuant to the terms of this Agreement in the event of an Involuntary Early Termination occurring as of the date on which the Change of Control occurred assuming the Board had agreed to pay such benefits to the Executive or his beneficiary, on an Actuarial Equivalent basis, as of the date of the Change of Control. Within the same time period following a Change of Control, the Company shall make a further irrevocable contribution to the Rabbi Trust in an amount sufficient to pay for the Trustee's fees and for actuarial, accounting, legal and other professional or administrative services necessary to implement the terms of this Agreement following a Change of Control. Such amount shall be determined by the Trustee's estimate of its fees (as provided in the Rabbi Trust agreement) and by estimates obtained by the Trustee from the independent actuaries, accountants, lawyers and other appropriate professional and administrative personnel who provided such services to the Trust or the Company immediately before the Change of Control. The Rabbi Trust shall be established by the Company and shall conform substantially with the Model Rabbi Trust found at IRS Revenue Procedure 92-64. IN WITNESS WHEREOF, the parties to this Agreement set forth above consent to the terms of this Agreement. BENJAMIN FRANKLIN SAVINGS BANK By ___________________________ Title ________________________ BENJAMIN FRANKLIN BANCORP M.H.C. By ___________________________ Title ________________________ EXECUTIVE: ______________________________ Thomas R. Venables - 10 - BENEFICIARY DESIGNATION BENJAMIN FRANKLIN SAVINGS BANK SALARY CONTINUATION AGREEMENT THOMAS R. VENABLES I designate the following as beneficiary of any Death Benefits under this Agreement: Primary: _______________________________________________________________________ ________________________________________________________________________________ Contingent: ____________________________________________________________________ ________________________________________________________________________________ NOTE: TO NAME A TRUST AS BENEFICIARY, PLEASE PROVIDE THE NAME OF THE TRUSTEE(s) AND THE EXACT NAME AND DATE OF THE TRUST AGREEMENT. I understand that I may change these beneficiary designations by filing a new written designation with the Company. I further understand that the designations will be automatically revoked if the beneficiary predeceases me, or, if I have named my spouse as beneficiary and our marriage is subsequently dissolved. Signature __________________________ Date _______________________________ Received by the Company this ______ day of _________________, 2002. By _________________________________ Title ______________________________ - 11 - EX-10.4.2 15 b52576bfexv10w4w2.txt EX-10.4.2 BENJAMIN FRANKLIN BANK SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN WITH STEPHEN F. BANKS EXHIBIT 10.4.2 BENJAMIN FRANKLIN SAVINGS BANK SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN EFFECTIVE AS OF JANUARY 1, 2000 BENJAMIN FRANKLIN SAVINGS BANK SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN 1. Purpose. The purpose of the Benjamin Franklin Savings Bank Supplemental Executive Retirement Plan (the "Plan") is to provide supplemental retirement benefits to certain executives of Benjamin Franklin Savings Bank (hereinafter called the "Bank"), who have been designated by the Board of Directors of the Bank as being eligible to participate in the Plan. 2. Definitions. 2.1 "Accrued Benefit" shall mean the benefit amount the Participant would be entitled to under Section 3.1, commencing at his Normal Retirement Date. (a) In the event of (i) death, (ii) disability, (iii) termination of employment, (iv) early retirement, or (v) merger, consolidation or sale, as the case may be, the benefit to which the Participant will be entitled shall be determined by first (A) multiplying the Participant's Benefit Computation Base by a fraction, not to exceed (1), the numerator of which is the actual number of months of the Participant's employment with the Bank, and the denominator of which is 180 months, and then (B) reducing the adjusted Benefit Computation Base by the offsets in Section 3.1(a)(i) through (a)(iv), as modified by (b) below. (b) If the Participant employment terminates for any reason prior to his Normal Retirement Date, in calculating his Accrued Benefit, (i) the offset for Primary Social Security retirement benefit shall be calculated on the basis of the amount projected to be payable at the Participant's Social Security normal retirement age assuming continued earnings by the Participant at the rate in effect at termination of employment until the Participant's Social Security normal retirement age; (ii) the offset for any qualified defined benefit plan shall be calculated on the basis of the Participant's accrued benefit in said plan upon termination of employment projected to be payable at the Participant's Normal Retirement Date; (iii) the offset for any benefits arising from employer contributions attributable to the account balances of the Participant arising from the Bank's 401(k) plan shall also be calculated on the basis of the Participant's account balance in such plan upon termination of employment projected to be payable at the Participant's Normal Retirement Date using an investment return assumption of 6% per annum; and (iv) the offset for any other non-qualified supplemental retirement plan shall be calculated on the basis of the Participant's accrued benefit in said plan upon termination of employment projected to be payable at the Participant's Normal Retirement Date. 2.2 "Bank" shall mean the Benjamin Franklin Savings Bank, a Massachusetts corporation, and any affiliated entity, successor organization, parent, subsidiary or holding company. 2.3 "Benefit Computation Base" shall mean the average of the Participant's annual compensation (including base salary, bonus, and any salary reduction amounts pursuant to Sections 401(k) or 125 of the Internal Revenue Code of 1986, as amended) paid during the 36 consecutive calendar months during the Participant's last ten years of employment by the Bank in which such compensation is the highest. 2.4 "Board of Directors" shall mean the Board of Directors of the Bank in office from tune to time. 2 2.5 "Cause" shall mean (a) willful misconduct by the Participant which is materially and demonstratively injurious to the Bank; (b) continued and willful failure by the Participant to substantially perform his duties after written demand for performance is delivered (specifically describing the manner in which he has not substantially performed his duties), except in the case of disability; or (c) criminal or civil conviction of the Participant, a plea of nolo contendere by the Participant or conduct by the Participant that would reasonably be expected to result in material injury to the reputation of the Bank if he were retained in his position with the Bank. 2.6 "Normal Form" under the Plan shall mean the 15-year installment payment, payable monthly. 2.7 "Normal Retirement Date" shall mean the first day of the month coincident with or next following a Participant's 65th birthday. 2.8 "Participant" shall mean an executive of the Bank who has been designated by the Board of Directors of the Bank as being eligible to participate in the Plan. The initial Participants are listed on Schedule A attached hereto. 3. Benefits. 3.1 Normal Retirement Benefit. (a) If a Participant shall continue in the employment of the Bank until his Normal Retirement Date, he shall be entitled to a Normal Retirement Benefit, determined as of the effective date of his actual retirement and continuing in the same amount for 15 years, 3 payable monthly, in the annual amount of 65% of his Benefit Computation Base (hereinafter defined), reduced by the sum of (i), (ii), (iii) and (iv) below. (i) Fifty percent (50%) of the Participant's annual Primary Social Security retirement benefit projected to be payable as of the Participant's Social Security normal retirement age; (ii) The annual amount of benefits payable to the Participant (or his beneficiary) at his Normal Retirement Date calculated on a single life annuity basis from any qualified defined benefit pension plan maintained and funded by the Bank, as such plan or plans may be amended or modified from time to time; (iii) The annual amount of benefits payable to the Participant at his Normal Retirement Date on an installment basis over 15 years attributable to the portion of the account balances of the Participant arising from employer contributions (but excluding the portion of such balances arising from employee pre-tax and post-tax contributions) at the date of determination, from the Bank's 401(k) plan maintained by the Bank, as such plan may be modified from time to time; (iv) The annual amount of benefits payable to the Participant at his Normal Retirement Date on an installment basis over 15 years from any other non-qualified supplemental retirement plan maintained and funded by the Bank, as such plan or plans may be amended or modified from time to time. (b) If a Participant has (or will have) completed fewer than 15 years (or 180 months) of service with the Bank as of his Normal Retirement Date, then the Normal Retirement Benefit shall be the amount determined by first (i) multiplying his Benefit 4 Computation Base by a fraction, not to exceed one (1), the numerator of which is the actual number of months of the Participant's employment with the Bank, and the denominator of which is 180 months and then (ii) reducing the adjusted Benefit Computation Base by the offsets in (a)(i) through (a)(iv) above. 3.2 Death of Participant. (a) If a Participant dies while employed by the Bank but prior to the commencement of the payment of benefits under this Plan, the Bank will pay to the Participant's named beneficiary on a monthly basis, for a period of 15 years, commencing on the first day of the month next following the delivery to the Bank of a death certificate, an annual amount equal to the Participant's Accrued Benefit as of the Participant's date of death. (b) If a Participant dies following the commencement of the payment of benefits pursuant to the Normal Form under this Plan but prior to full payment of his benefits under this Plan, the remaining benefits shall continue to the named beneficiary of the Participant until all such benefits have been paid under the Normal Form. (c) If a Participant dies following the termination of his employment with the Bank and prior to the commencement of the payment of benefits under this Plan, the Bank shall pay to the Participant's named beneficiary an annual benefit which shall be the Participant's Accrued Benefit as of the date of his termination of his employment. Such benefits shall be payable monthly, commencing on the first day of the month next following the Participant's Normal Retirement Date, or any date prior to his Normal Retirement Date approved by the Bank, and continuing for 15 years. 5 (d) The Bank, in its sole discretion, may pay any death benefit to a Participant's beneficiary in a lump sum in an amount equal to the present value of the Participant's Accrued Benefit in (a) or (c) above, or the remainder of the benefits in (b) above. (e) The Participant may designate, in writing to the Bank, one or more beneficiaries. If no beneficiary is so named or if no named beneficiary is living at the time a payment is due, benefit payments shall be made, when due, to the Participant's estate. 3.3 Disability Prior to Retirement. (a) In the event a Participant shall become disabled, the Bank will pay no disability benefits hereunder. Disability benefits (if any) will be paid to the Participant through such long-term disability insurance program as may be sponsored by the Bank. Upon the later of the Participant's attainment of his Normal Retirement Date or cessation of benefits under the Bank's long-term disability insurance program, the Participant shall commence receiving payment of his Accrued Benefit determined as of the date of the disability. Such Accrued Benefit shall be paid monthly for 15 years. The Bank, in its sole discretion, may pay the present value of the Participant's Accrued Benefit to him in a lump sum at any time. (b) In the event a Participant returns to work with the Bank after terminating employment because of disability, he shall again be eligible to continue to participate in this Plan as though such disability had not occurred; provided, however, that if he has previously received a distribution of his Accrued Benefit, any future benefit payable to him under the Plan shall be reduced by the value of any prior distribution. 3.4 Early Retirement, Termination of Service or Discharge. Except to the extent otherwise provided in Sections 4.2 and 4.3, in the event that a Participant's employment with 6 the Bank is terminated, voluntarily or involuntarily, before the Participant attains his Normal Retirement Date, for reasons other than death or disability, the Participant shall be entitled to an annual benefit, which shall be his Accrued Benefit as of the date of his termination of employment. Such benefit shall be payable monthly, commencing on the first day of the month next following the Participant's Normal Retirement Date and continuing for 15 years. Subject to the consent of the Bank, the Participant may request early commencement of such benefit provided in this Section 3.5 at any date between age 55 and age 65 if he has completed at least ten years of service with the Bank. 3.5 Lump Sum Payment. In lieu of receiving payments in the Normal Form, subject to approval by the Bank, a Participant may elect at least 12 months prior to the month in which payments are to begin, a lump sum equal to the present value of his Accrued Benefit. Present value shall be determined using an interest assumption of 6%. 3.6 Interest. Any payment that is required to be made hereunder that is delayed beyond the date specified in this Plan shall bear interest at a variable rate which shall be the rate of interest on one year U.S. Treasury Bills determined at the first auction of each calendar year or part thereof for which interest is to be applied to any obligation hereunder. 4. Vesting and Other Limitations. 4.1 Vesting. Each Participant is fully vested in his Accrued Benefit at all times. 4.2 Employment by Competition. Anything to the contrary in this Plan notwithstanding, in the event that at any time within the three-year period after a Participant's termination of employment with the Bank, the Participant shall compete with the business of the Bank, then all payments which might otherwise be due and payable hereunder shall be 7 immediately forfeited and all rights of the Participant and his beneficiary hereunder shall become void. The provisions of this Section 4.2 shall not apply in the event the Participant's termination of employment occurs after any merger or acquisition of the Bank with or by another corporation. A Participant will be deemed to have competed with the business of the Bank if he, directly or indirectly, whether as partner, shareholder (other than as the owner of less than 2% of the outstanding capital stock of a publicly traded corporation), consultant, agent, employee, co-venturer, or otherwise, or through any Person (as hereafter defined), (a) competes in the Bank's market area (defined as the area within 15 miles of any branch or facility of the Bank) with, or is employed in such market area by a Person which competes with, the banking or any other business conducted by the Bank during the period of his employment, (b) attempts to hire any employee of the Bank, assists in such hiring by any other Person, or encourages any such employee to terminate his relationship with the Bank, or (c) solicits or encourages any customer of the Bank to terminate its relationship with the Bank or to conduct with any other Person any business or activity which such customer conducts or could conduct with the Bank. For purposes of this Plan, the term "Person" shall mean an individual, a corporation, an association, a partnership, an estate, a trust and any other entity or organization, and shall include an affiliate office within the Bank's "market area" as defined in Section 4.2(a) above of a Person which headquarters or parent organization is located outside the "market area" as so defined. 8 4.3 Forfeiture. Anything to the contrary in this Plan notwithstanding, benefits under this Plan shall be immediately forfeited and all rights of a Participant and his beneficiary hereunder shall become null and void, if the Participant's employment with the Bank is terminated for Cause. 4.4 Operation of Law on Bank's Obligations. In the event that any governmental entity promulgates any statute, rule, regulation, policy or order which restricts or prohibits the Bank from making payments to the Participants under this Plan or affects any operation of the Plan, then the Bank's obligations to make payments to the Participants (or their beneficiaries) hereunder shall terminate or be restricted or suspended (consistent with such law or binding regulation, policy or order) for so long as such restriction or prohibition applies to the Bank. Nothing in this Plan is intended to require or shall be construed as requiring the Bank to do or fail to do any act in violation of any applicable law or binding regulation, policy or order. Provisions other than payment provisions which are found to be invalid or illegal will not be given effect and the Plan will be enforced as if those provisions had never been inserted. 5. Administration. 5.1 Administrator. The Board of Directors is charged with the administration and operation of the Plan. 5.2 Powers of Administration. The Board of Directors shall have all such discretionary powers and authority as are necessary to discharge its duties, including but not limited to, the interpretation and construction of all provisions of the Plan and the determination of all questions of fact, eligibility, participation, benefits and all other related or incidental matters. The Board of Directors shall, in its sole discretion, decide all such 9 questions in accordance with the terms of the Plan and the applicable law, and its good faith decision will be binding on the Board of Directors, the Bank, the Participants and all other interested parties. 5.3 Delegation. The Board of Directors may authorize any other person to execute any documents or authorize payments on its behalf. The Board of Directors may also delegate to any other person or persons, severally or jointly, the responsibility for the preparation and filing of all disclosure material and reports which the Board of Directors is required to file by law. 5.4 Rules and Regulations. The Board of Directors, subject to the provisions of the Plan, may adopt such rules and regulations as it deems necessary to carry out the provisions of the Plan. 5.5 Claims Procedure. In the event that benefits under this Plan are not paid to a Participant (or his beneficiary in the case of the Participant's death), and such person feels entitled to receive them, a claim shall be made in writing to the Bank within 60 days after written notice from the Bank to the Participant or his beneficiary or personal representative that payments are not being made or are not to be made under this Plan. Such claim shall be reviewed by the Board of Directors. If the claim is approved or denied, in full or in part, the Board of Directors shall provide a written notice of approval or denial within 60 days from the date of receipt of the claim setting forth the specific reason for denial, specific reference to the provision of this Plan upon which the denial is based, and any additional material or information necessary to perfect the claim, if any. Also, such written notice shall indicate the steps to be taken if a review of the denial is desired. If a claim is denied (a claim shall be 10 deemed denied if the Board of Directors does not take action within the aforesaid 60-day period) and a review is desired, the Participant (or beneficiary in the case of the Participant's death), shall notify the Board of Directors in writing within 20 days. In requesting a review, the Participant or his beneficiary may review this Plan or any document relating to it and submit any written issues and comments he may feel appropriate. In its sole discretion the Board of Directors shall then review the claim and provide a written decision within 60 days. This decision likewise shall state the specific reasons for the decision and shall include reference to specific provisions of this Plan on which the decision is based. Any decision of the Board of Directors shall be binding on the Participant, his personal representative, or any beneficiary. 6. Miscellaneous. 6.1 Alienability. Neither the Participants nor any beneficiary thereof under this Plan shall have any power or right to transfer, assign, anticipate, hypothecate, mortgage, commute, modify, or otherwise encumber any of the benefits payable hereunder, nor shall any of said benefits be subject to seizure for the payment of any debts, judgments, alimony or separate maintenance, owed by the Participants or their beneficiaries or any of them, or be transferable by operation of law in the event of bankruptcy or otherwise. 6.2 Participation in Other Plans. Nothing contained in this Plan shall be construed to alter, abridge, or in any manner affect the rights and privileges of the Participants to participate in and be covered by any pension, profit sharing, group insurance, bonus or any employee plan or plans which the Bank may have or hereafter have. 11 6.3 Funding. (a) The Bank reserves the right at its sole and exclusive discretion to insure or otherwise provide for the obligations of the Bank undertaken by this Plan or to refrain from same, and to determine the extent, nature and method thereof, including the establishment of one or more trusts. Should the Bank elect to insure this Plan, in whole or in part, through the medium of insurance or annuities, or both, the Bank shall be the owner and beneficiary of the policy or annuity. At no time shall the Participants be deemed to have any right, title or interest in or to any specified asset or assets of the Bank, or any trust or escrow arrangement, including, but not by way of restriction, any insurance or annuity contracts or the proceeds therefrom. (b) Any such policy, contract or asset shall not in any way be considered to be security for the performance of the obligations of this Plan. (c) If the Bank purchases a life insurance or annuity policy on the life of a Participant, the Participant agrees to sign any papers that may be required for that purpose and to undergo any medical examination or tests (at the Bank's expense) which may be necessary, and generally cooperate with the Bank in securing such policy. (d) To the extent a Participant acquires a right to receive benefits under this Plan, such right shall be equivalent to the right of an unsecured general creditor of the Bank. 6.4 Reorganization. In the event the Bank shall merge or consolidate into or with another corporation or in the event of the sale of substantially all of its assets to another Person, if a Participant and such corporation or Person do not agree that the Participant shall continue in the employ of such corporation or Person, or such corporation or Person does not 12 so agree to assume and discharge the obligations under this Plan, the Bank shall pay to the Participant immediately prior to the consummation of the merger, consolidation or sale, in one lump sum, the present value of his Accrued Benefit as of the date of such merger, consolidation or sale. 6.5 Benefits and Burdens. This Plan shall be binding upon and inure to the benefit of the Participants and their personal representatives, the Bank, and any successor organization which shall succeed to substantially all of the Bank's assets and business without regard to the form of such succession. 6.6 Jurisdiction. This Plan shall be construed, administered and enforced in accordance with the laws of the Commonwealth of Massachusetts to the extent not preempted by the Employee Retirement Income Security Act of 1974, as amended. 6.7 Gender. Any reference in this Plan to the masculine shall be deemed to include the feminine where the context so requires. 7. Plan Amendments and Termination. 7.1 Right to Amend or Terminate. The Bank reserves the right to make from time to time any amendment to the Plan. The Bank further reserves the right to terminate the Plan at any time. Notwithstanding the foregoing, in no event shall any amendment or termination result in the reduction of the Accrued Benefit of any Participant earned prior to the date of amendment or termination. 7.2 Action by Bank. Any action by the Bank under this Plan may be made by resolution of the Board of Directors of the Bank. 13 IN WITNESS WHEREOF, the Bank has caused this Plan to be duly executed by its duly authorized officer and its Corporate Seal affixed at Franklin, Massachusetts this 21st day of August, 2000. BENJAMIN FRANKLIN SAVINGS BANK /s/ Kenneth B. Osborn By: /s/ Stephen F. Banks - ----------------------- ----------------------------- Witness Title Senior Vice President 14 SCHEDULE A Kenneth B. Osborn George A. Danello Patrick E. Niro Stephen F. Banks 15 EX-10.5 16 b52576bfexv10w5.txt EX-10.5 BENJAMIN FRANKLIN BANCORP DIRECTOR FEE CONTINUATION PLAN EXHIBIT 10.5 BENJAMIN FRANKLIN BANCORP, INC. DIRECTOR FEE CONTINUATION PLAN This Plan is adopted by Benjamin Franklin Bancorp, Inc. for the purpose of recognizing and rewarding Directors for services and contributions to the Benjamin Franklin Bank and to Benjamin Franklin Bancorp, Inc. Subject to the terms of the Plan, Directors will receive a continuing benefit from the Holding Company upon retirement or death. PART 1. DEFINITIONS 1.1. AGGREGATE ANNUAL FEES shall mean the total of all fees for services as a Director paid by the Holding Company or the Bank to a Director during a calendar year. 1.2. AVERAGE FINAL ANNUAL FEES shall mean the average of the Aggregate Annual Fees paid to a Director for the three calendar years preceding the year of the Director's Retirement. 1.3. BANK shall mean Benjamin Franklin Bank, a Massachusetts chartered savings bank with its executive offices in Franklin, Massachusetts, and its successors. 1.4. BENEFICIARY shall mean the person(s) or trust designated by a Participant to receive benefits pursuant to this Plan in the Event of such Participant's death. If no Beneficiary is designated, the Beneficiary shall be the Participant's surviving spouse, if living, otherwise the Participant's estate shall be the Beneficiary. 1.5. CHANGE IN CONTROL. A "Change in Control" shall be deemed to have occurred in any of the following events: (a) If there has occurred a change in control which the Holding Company would be required to report in response to Item 5.01 of Form 8-K promulgated under the Securities Exchange Act of 1934, as amended (the "1934 Act"), or, if such regulation is no longer in effect, any regulations promulgated by the Securities and Exchange Commission pursuant to the 1934 Act which are intended to serve similar purposes; (b) When any "person" (as such term is used in Sections 13(d) and 14(d)(2) of the 1934 Act) becomes a "beneficial owner" (as such term is defined in Rule 13d-3 promulgated under the 1934 Act), directly or indirectly, of securities of the Holding Company or the Bank representing twenty-five percent (25%) or more of the total number of votes that may be cast for the election of directors of the Holding Company or the Bank, as the case may be; (c) During any period of two consecutive years, individuals who at the beginning of such period constitute the Board of Directors of the Holding Company, and any new director (other than a director designated by a person who has entered into an agreement with the Holding Company to effect a transaction described in Subsection (b), (d) or (e) of this Section 1.4) whose election by the Board or nomination for election by the Holding Company's stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute at least a majority of the Board of Directors of the Holding Company; (d) The stockholders of the Holding Company approve a merger, share exchange or consolidation ("merger or consolidation") of the Holding Company with any other corporation, other than (a) a merger or consolidation which would result in the voting securities of the Holding Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 70% of the combined voting power of the voting securities of the Holding Company or such surviving entity outstanding immediately after such merger or consolidation or (b) a merger or consolidation effected to implement a recapitalization of the Holding Company (or similar transaction) in which no "person" (as hereinabove defined) acquires more than 30% of the combined voting power of the Holding Company's then outstanding securities; or (e) The stockholders of the Holding Company or the Bank approve a plan of complete liquidation of the Holding Company or the Bank or an agreement for the sale or disposition by the Holding Company or the Bank of all or substantially all of the Holding Company's or the Bank's assets. 1.6. DIRECTOR(s) shall mean persons duly elected as a director of the Bank or the Holding Company, and who are not compensated employees of the Bank or the Holding Company. 1.7. EFFECTIVE DATE of the Plan shall mean ______ __, 2005. 1.8. HOLDING COMPANY shall mean Benjamin Franklin Bancorp, Inc. 1.9. NORMAL PAYMENT DATE shall mean the later to occur of (a) the date upon which the Director attains the Minimum Retirement Age and (b) the date on which the Director ceases to serve as a Director. 1.10. MINIMUM RETIREMENT AGE shall mean the date on which the Director attains age seventy (70). 1.11. NORMAL RETIREMENT BENEFIT shall consist of five equal annual payments, each of which shall be equal in amount to the Director's Average Final Annual Fees (determined as of the date of termination of service as a Director). 1.12. PARTICIPANT shall mean a Director who has been duly elected as such, meets the Eligibility requirements of the Plan, and has not waived participation in the Plan. -2- 1.13. PLAN shall mean the terms, conditions and benefits provided by this document and any amendment or restatement of this document. 1.14. RETIREMENT shall mean termination of services as a Director for any reason other than death, disability or Specially-Defined Cause. 1.15. SPECIALLY-DEFINED CAUSE shall mean the Director's deliberate dishonesty with respect to any of the Bank, the Holding Company, or any subsidiary or affiliate thereof, or conviction of a crime related to banking activity. 1.16. YEARS OF SERVICE shall mean the number of years a Participant has served as a Director of the Bank or the Holding Company, whether before or after the Effective Date of the Plan. Except as otherwise provided in Section 2.4, Years of Service shall include service with a corporate predecessor of the Bank or the Holding Company. PART 2. ELIGIBILITY AND BENEFITS 2.1. ELIGIBILITY. Any person who is a Director as of the Effective Date of the Plan shall be eligible to participate in the Plan immediately. Any person elected as a Director subsequent to the Effective Date of the Plan shall be eligible to participate in the Plan as of the first day of the calendar month next following the date of his election as a Director. 2.2. NORMAL RETIREMENT BENEFIT. Upon Retirement, a Participant who has either (i) completed fifteen (15) Years of Service as of the date of Retirement, or (ii) completed at least ten (10) Years of Service and attained Minimum Retirement Age as of the date of Retirement, shall be entitled to receive a Normal Retirement Benefit. Payment of this benefit shall commence upon termination of services. 2.3. LESS THAN 15 YEARS OF SERVICE. Upon Retirement, a Participant who has not either (i) completed at least 15 Years of Service as of the date of Retirement, or (ii) completed ten (10) Years of Service and attained Minimum Retirement Age as of the date of Retirement, shall receive (x) the Normal Retirement Benefit multiplied by (y) a fraction of which the numerator shall be the Director's total Years of Service and the denominator shall be fifteen (15). Payment of this benefit shall commence upon termination of services. 2.4. LESS THAN 3 YEARS OF SERVICE. Notwithstanding any other provision of this Plan, a Participant who has not completed 3 Years of Service with the Bank or the Holding Company as of the date of termination of service as a Director shall not receive any benefit under this Plan. For purposes of this Section 2.4, the measurement of Years of Service shall include service with the Bank or the Holding Company prior to the Effective Date of the Plan but shall not include service with a corporate predecessor of the Bank or the Holding Company, 2.5. BENEFITS UPON CHANGE OF CONTROL. Subject to Section 2.4, if within three years following a Change in Control, a Participant's service as a Director is terminated by the Bank or the Holding Company other than for Specially-Defined Cause, or if the Director is not proposed for re-election by the nominating committee of the Bank or the Holding Company, the Participant will be entitled to receive a Normal Retirement Benefit calculated as though the Participant had completed fifteen Years of Service. Payment of this benefit shall be made in a lump sum immediately upon termination of service. -3- 2.6. DISABILITY. Subject to Section 2.4, in the event that a Participant becomes disabled prior to the Minimum Retirement Age, the Participant will be entitled to receive a Normal Retirement Benefit calculated as thought the Participant had completed fifteen Years of Service. Payment of this benefit shall commence upon termination of services, and shall be made annually. For purposes of this provision, a Participant shall be considered to be "disabled" when he is no longer capable of performing the material aspects of his Director's duties as a result of physical and/or mental impairment. Such determination shall be made by the Board of Directors. 2.7. PRE-RETIREMENT DEATH. Subject to Section 2.4, if a Participant dies while continuing to serve as a Director of the Bank or the Holding Company, the Participant's Beneficiary shall be entitled to receive a Normal Retirement Benefit, calculated as if the Participant had completed fifteen Years of Service. Payment of this benefit shall commence upon the death of the Director and shall be made annually. 2.8. POST-RETIREMENT DEATH. If a Participant dies after Retirement, the Participant's Beneficiary shall receive the remainder of any benefit payments to which the Participant was entitled under Section 2.2 or 2.3 above, as applicable. Payments shall be made annually. 2.9. TERMINATION FOR SPECIALLY-DEFINED CAUSE. Notwithstanding any other provision hereof, in the event a Participant's service as a Director is terminated for Specially-Defined Cause, as defined herein, the Participant shall not be entitled to any benefit under this Plan. PART 3. ADDITIONAL PROVISIONS 3.1. PLAN CONTINUATION. This Agreement shall bind the Directors and the Holding Company, their heirs, successors, personal representatives, successors and assigns. 3.2. PLAN AMENDMENT OR TERMINATION. This Plan may be amended or terminated by a two-thirds vote of all directors of the Holding Company, but any such amendment or termination shall not affect or change rights or obligations incurred up to the time of such amendment or termination. 3.3. APPLICABLE LAW. This Plan shall be governed and construed in accordance with the laws of the Commonwealth of Massachusetts. -4- IN WITNESS THEREOF, the Holding Company has caused this plan to be executed by its duly authorized officer effective as of the Effective Date. BENJAMIN FRANKLIN BANCORP, INC. By: ___________________________________ Date: _________________________________ -5- EX-10.6 17 b52576bfexv10w6.txt EX-10.6 BENJAMIN FRANKLIN BANCORP EMPLOYEE SALARY CONTINUATION PLAN EXHIBIT 10.6 BENJAMIN FRANKLIN BANCORP, INC. EMPLOYEE SALARY CONTINUATION BENEFIT PLAN References to the "Company" in this document shall mean Benjamin Franklin Bancorp, Inc. and any of its wholly owned direct and indirect subsidiaries, including, without limitation, Benjamin Franklin Bank as well as the successors in interest of each such entity. References to the "Bank" shall mean either Benjamin Franklin Bank or any other bank that is a wholly owned subsidiary of Benjamin Franklin Bancorp, Inc. or any successor in interest. 1. COVERED EMPLOYEES Subject to Section 2 below, the Salary Continuation Benefit (as herein defined) will be provided to any employee whose employment is terminated within twelve months after a Change in Control (as herein defined). 2. LIMITATIONS ON CHANGE IN CONTROL BENEFITS 2.1. GENERAL. No employee will be eligible for a Salary Continuation Benefit if (a) the employee's employment is terminated for "Cause", (b) the employee is a temporary employee, (c) the employee is offered a Comparable Position (as herein defined) within the Company and refuses to accept such position; or (d) the employee is paid solely on a commissioned basis ("Commissioned Employees"). Commissioned Employees shall be eligible for a Commissioned Employee Benefit (as herein defined). 2.2. CAUSE. The term "Cause" shall mean and include (a) neglect of or refusal to perform, other than as a result of sickness, accident or similar cause beyond an employee's reasonable control, any duty or responsibility as an employee of the Company after written notice by the Company to the employee; (b) any material breach by the employee of any agreement to which the employee and the Company are both parties; (c) deliberate dishonesty with respect to the Company or conviction for the commission of a felony ; or (d) any material misconduct or material neglect of duties by the employee in connection with the business or affairs of the Company. The foregoing definition of Cause is in no way intended to limit or qualify the right of the Company or any successor in interest to terminate any person's employment for any reason. 2.3. COMPARABLE POSITION. A comparable position shall mean a position which is offered to an employee where (a) there is no reduction in base salary or scheduled hours, and (b) the employee will be principally employed at a location not more than 25 miles from the office where the employee is principally employed immediately prior to the Change in Control and (c) the employee's commute does not increase by more than 20 miles. 3. DEFINITION OF "CHANGE IN CONTROL" A "Change in Control" will be deemed to have occurred: 3.1. If there has occurred a change in control which the Company would be required to report in response to Item 5.01 of Form 8-K promulgated under the Securities Exchange Act of 1934, as amended (the "1934 Act"), or, if such regulation is no longer in effect, any regulations promulgated by the Securities and Exchange Commission pursuant to the 1934 Act which are intended to serve similar purposes; 3.2. When any "person" (as such term is used in Sections 13(d) and 14(d)(2) of the 1934 Act) becomes a "beneficial owner" (as such term is defined in Rule 13d-3 promulgated under the 1934 Act), directly or indirectly, of securities of the Company or the Bank representing twenty-five percent (25%) or more of the total number of votes that may be cast for the election of directors of the Company or the Bank, as the case may be; 3.3. During any period of two consecutive years, individuals who at the beginning of such period constitute the Board of Directors of the Company, and any new director (other than a director designated by a person who has entered into an agreement with the Company to effect a transaction described in Section 3.2, 3.4 or 3.5 of this Agreement) whose election by the Board or nomination for election by the Company's stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute at least a majority of the Board of Directors of the Company; 3.4. The stockholders of the Company approve a merger, share exchange or consolidation ("merger or consolidation") of the Company with any other corporation, other than (a) a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 50% of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation or (b) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no "person" (as hereinabove defined) acquires more than 30% of the combined voting power of the Company's then outstanding securities; or 3.5. The stockholders of the Company or the Bank approve a plan of complete liquidation of the Company or the Bank or an agreement for the sale or disposition by the Company or the Bank of all or substantially all of the 2 Company's or the Bank's assets. 4. "SALARY CONTINUATION BENEFIT" DEFINED The Salary Continuation Benefit hereunder shall include each of the following three items: 4.1. Payment in one lump sum as of date of termination of employment of a severance benefit equal to the greater of (i) two weeks salary, at the then applicable Base Salary rate, for each year or partial year of service, up to a maximum of 52 weeks salary, or (ii) the applicable Minimum Benefit set forth in Section 6 below; and 4.2. Continuation of group medical, dental and life insurance under the same terms and conditions as if the employee had remained actively employed by the Company for the "Benefit Continuation Period," which is the greater of (a) six months or (b) the number of weeks of Salary Continuation Benefits to which the employee is entitled under this Plan; and 4.3. After the end of the Benefit Continuation Period, COBRA benefits for medical and dental insurance determined as though employment had terminated at the end of such Benefit Continuation Period. For purpose of this Section 4 and Section 6 below, "Base Salary" shall mean: (a) for salaried employees, the employee's annual base salary, but shall not include bonus payments, 401(k) matching payments, pension payments, or other payments not specifically included under this Plan. (b) for employees who receive commissions but who also receive a base salary (but excluding those Commissioned Employees who receive a "draw" as base salary), the employee's annual base salary, but shall not include bonus payments, 401(k) matching payments, pension payments, or other payments not specifically included under this Plan. (c) for hourly employees, the employee's total hourly wages for the twelve (12) full calendar months preceding termination of employment, but shall not include bonus payments, 401(k) matching payments, pension payments, or other payments not specifically included under this Plan. 5. COMMISSIONED EMPLOYEE BENEFIT The benefit to Commissioned Employees hereunder shall include each of the following two items: 5.1. Continuation of group medical, dental and life insurance under the same terms and conditions as if the employee had remained actively employed by the Company for a period of six months; and 3 5.2. After the end such six month period, COBRA benefits for medical and dental insurance determined as though employment had terminated at the end of such six month period. 6. MINIMUM BENEFIT 6.1. Officers at the level of Senior Vice President and above shall receive 52 weeks salary, at the then applicable Base Salary rate; and 6.2. Officers at the level of Vice President but below the level of Senior Vice President shall receive 39 weeks salary, at the then applicable Base Salary rate; and 6.3. Officers at the level of Assistant Vice President but below the level of Vice President shall receive at least 26 weeks salary, at the then applicable Base Salary rate; and 6.4. All other exempt employees shall receive at least 13 weeks salary, at the then applicable Base Salary rate; and 6.5. All other full-time employees shall receive at least 8 weeks salary, at the then applicable Base Salary rate; and 6.6. All part-time employees shall receive at least 6 weeks salary or wages, at the then applicable Base Salary rate. 7. OFFSET FOR AMOUNTS RECEIVED UNDER OTHER AGREEMENTS OR LAWS Salary Continuation Benefits payable pursuant to this Plan shall be reduced by the amount of any severance pay benefits payable to any officer under any employment, special termination, or change in control contract or to any employee under any "tin parachute", WARN or similar law. 8. WITHHOLDING All payments will be subject to withholding for taxes and co-payments by employees, for health, life insurance and dental benefits. The Company will have the right to withhold for lump sum amounts otherwise payable the aggregate amount of any co-payments required to be made by employees with respect to employee benefit programs which are continued under the Salary Continuation Plan. 9. PARACHUTE PAYMENT In the event that any amounts otherwise payable exceed in the aggregate the amount that may be deducted by the Company or by any successor in interest by reason of the operation of Section 280G of the Internal Revenue Code of 1986, as amended, the amount of such payments shall be reduced to the maximum which can be deducted by the Company. 4 10. OUTPLACEMENT SERVICES The following outplacement services shall be made available to employees whose employment is terminated: 10.1. All exempt and non-exempt emplloyees: Group workshops providing resume writing guidance and job search assistance for a period of three months following termination of employment. 10.2. Officers at the level of Assistant Vice President and above : Resume writing guidance, job search assistance, interview skills workshops and networking workshops, for a period of three months following termination of employment. 10.3. Officers at the level of Senior Vice President and above: Resume writing guidance, job search assistance, interview skills workshops and networking workshops, for a period of six months following termination of employment. 11. OTHER BENEFIT PLANS Salary Continuation Benefits are not covered compensation for benefit plan purposes. An employee shall not accrue any vacation, sick leave, bonus, incentive compensation, retirement or other benefits by reason of receiving Salary Continuation Benefits. 12. DOCUMENTATION TO BE EXECUTED 12.1. Notwithstanding any other provision of this Salary Continuation Plan, no person shall be eligible to receive any benefits or payments under this Plan unless he or she shall have, as a precondition to eligibility for and receipt of such benefits or payments, executed and delivered to the Company (before the deadline described in Section 12.2) all documentation that the Company may require (collectively, "Required Documentation"). Among other matters, the Required Documentation shall include a release of all claims and a non-disparagement agreement in such form as shall be acceptable to the Company in its discretion. 12.2. All Required Documentation must be completed and delivered to the Company no later than the date that is [TWO MONTHS] after such Required Documentation shall first have been presented to the employee for his or her signature. 13. PLAN AMENDMENT AND TERMINATION The Company may at any time, in its sole and absolute discretion, amend or terminate the Plan in whole or in part; provided, however, that no amendment or termination shall be made by the Company on or after a Change in Control. Any employee who is terminated after an amendment or termination of the Plan shall have the right to receive only such benefits, if any, as are provided after such amendment of 5 termination. 14. EFFECTIVE DATE The Effective Date of this Plan shall be as of _________, 2005. 6 EX-10.7.1 18 b52576bfexv10w7w1.txt EX-10.7.1 PAYMENTS AND WAIVER AGREEMENT WITH RICHARD E. BOLTON, JR. EXHIBIT 10.7.1 PAYMENTS AND WAIVER AGREEMENT AGREEMENT, dated as of September 1, 2004 ("AGREEMENT DATE"), by and among Benjamin Franklin Bancorp, M.H.C. ("BANCORP"), Benjamin Franklin Savings Bank ("BFSB"), Chart Bank, A Cooperative Bank ("CHART"), and Richard E. Bolton, Jr. ("EXECUTIVE"). WITNESSETH WHEREAS, Executive is a director and chief executive officer of Chart; and WHEREAS, Chart has entered into an employment agreement as well as a variety other agreements and arrangements with Executive under which Executive is entitled to certain payments in the event of a change in control of Chart or under certain other circumstances; and WHEREAS, Bancorp and BFSB (individually and collectively, "BEN FRANKLIN") and Chart are prepared to enter into an Agreement and Plan of Merger, dated as of the date hereof (the "MERGER AGREEMENT"), pursuant to which Chart and Benjamin Franklin Savings Bank will merge on the terms and conditions set forth therein and, in connection therewith, outstanding shares of Chart Common Stock will be converted into shares of Ben Franklin Common Stock and/or cash in the manner set forth therein (capitalized terms used but not defined herein shall have the meanings defined in the Merger Agreement); and WHEREAS, as an inducement to Ben Franklin to enter into the Merger Agreement, Chart and Executive desire to enter into this Agreement among themselves and with Ben Franklin so as to set forth their mutual understanding of various matters relating to Executive; and WHEREAS, Executive's relationship with Ben Franklin as of the Effective Time (as such term is defined in the Merger Agreement) is the subject of a Consulting and Noncompetition Agreement between Ben Franklin and Executive entered into as of the date hereof and to be effective as of the Effective Time (the "CONSULTING AND NONCOMPETITION AGREEMENT"); NOW, THEREFORE, in consideration of the foregoing and the mutual covenants set forth herein, the parties hereto agree as follows: 1. TERMINATION OF EMPLOYMENT, DIRECTORSHIPS. At the Effective Time, all employment and director relationships between Executive and Chart or any affiliate of Chart shall terminate, provided that Executive will be appointed as a director of Ben Franklin and Benjamin Franklin Savings Bank as of the Effective Time. Without limiting the foregoing, Chart and Executive agree that at the Effective Time, Executive shall cease to be a director, officer, employee or consultant to Chart or any other direct or indirect subsidiary of Chart. 2. TERMINATION OF VARIOUS EMPLOYMENT ARRANGEMENTS. (a) DEFINITION OF EMPLOYMENT ARRANGEMENT. The term "Employment Arrangement" shall mean any plan, agreement or arrangement of Chart or any affiliate (i) to which Executive is a party, or (ii) with respect to which Executive is a direct or indirect beneficiary, or (iii) under or with respect to which Executive may have any right to receive compensation, payments or any other benefit. (b) TERMINATION OF EMPLOYMENT ARRANGEMENTS. Except as otherwise provided in Section 3 or in Section 4, from and after the Effective Time, Executive shall not be entitled to receive any further payments or benefits under any Employment Arrangements. Without limiting the generality of the foregoing, the parties specifically agree that from and after the Effective Time, each of the Employment Arrangements shall automatically terminate without the necessity of any further action on the part of any party thereto, with the result that any and all obligations of Chart under the Employment Arrangements shall be null and void and neither Executive nor any heir, successor or assignee shall have any continuing rights thereunder. In furtherance of the limitations on rights and benefits described in this Section 2(b), from and after the Effective Time the following Employment Arrangements will terminate: (i) The Employment Agreement between Executive and Chart, dated as of July 25, 2001, including, without limitation, any and all payments and benefits (such as health and pension plans, club memberships, and automobile) that by the terms of the Employment Agreement are to continue after termination or expiration of the Employment Agreement; and (ii) Any other Employment Arrangement now in existence or hereinafter adopted that is not specifically listed as a "Permitted Arrangement" under Section 4. 3. PAYMENTS TO EXECUTIVE. In connection with the terminations provided in Section 1 and in Section 2, Chart shall pay the following amounts to Executive, immediately prior to the Effective Time: (a) ACCRUED BASE SALARY AND VACATION. Immediately prior to the Effective Time, Chart shall pay to Executive a cash amount equal to the sum of (i) Executive's accrued but unpaid annual base salary to the Effective Time, and (ii) an amount in compensation for Executive's accrued but unused vacation time for calendar year 2005, which shall accrue during calendar year 2005 at the rate of 0.38 days per week, less vacation days actually taken in 2005. Executive represents to each of the other parties hereto that his base salary has been paid to him in full through and including the last regular payment date established by Chart for the payment of wages to its employees. (b) EMPLOYMENT ARRANGEMENT TERMINATION PAYMENT. Immediately prior to the Effective Time, Chart shall pay to Executive a cash amount equal to the Termination Payment. (i) "TERMINATION PAYMENT" shall mean the lesser of (x) $620,000 and (y) the Permissible Amount. (ii) "PERMISSIBLE AMOUNT" shall mean the maximum amount that may be paid to Executive without causing any portion of such payment to be non-deductible to Chart or Ben Franklin by reason of the operation of Section 280G of the Internal Revenue Code of 1986, as amended (the "CODE"). For all purposes under this Agreement the amount deemed to be payable without causing any such amount to be non-deductible shall be computed after deducting the value of all non-cash items, such as the acceleration of option - 2 - vesting or the acceleration of the payment of any bonus, that are treated as parachute payments under Section 280G of the Code. (c) CALCULATION OF PERMISSIBLE AMOUNT. The determination of the Permissible Amount shall be made (after January 31, 2005 and prior to the Closing) by a nationally recognized accounting firm selected by Ben Franklin and reasonably acceptable to Executive (the "ACCOUNTING FIRM"), based on data and information provided by Ben Franklin, Chart and Executive. Chart and Executive shall each provide to Ben Franklin and the Accounting Firm such data and information as Ben Franklin or the Accounting Firm shall request in order to calculate the Permissible Amount. Chart and Executive shall each certify to Ben Franklin and the Accounting Firm that the data supplied to Ben Franklin and the Accounting Firm in order to calculate the Permissible Amount is accurate and complete, to the best knowledge of Chart and Executive (as the case may be). The Accounting Firm shall provide detailed supporting calculations both to Ben Franklin and Executive at such time or times as are reasonably requested by Ben Franklin or Executive. 4. CERTAIN SPECIFIED PERMITTED ARRANGEMENTS TO REMAIN IN EFFECT. Except as expressly provided in this Agreement, the parties agree that the provisions of Section 2(b) shall have no special effect on the rights and obligations of Executive and Chart under the following plans and arrangements in the form in effect on the Agreement Date and disclosed to Ben Franklin as of such date (collectively, the "PERMITTED ARRANGEMENTS"): (a) The Chart Bank 1996 Stock Option Plan, as amended; and (b) Chart's 401(k) Savings Plan. 5. CONTINUATION OF CERTAIN OBLIGATIONS. Notwithstanding the provisions of Section 2(b), the termination of the Employment Arrangements shall not relieve Executive of any obligation to keep business or other information related to Chart or to its customers or business confidential or to cooperate with Chart and its affiliates in certain litigation. 6. NO OTHER RIGHTS TO BENEFITS IN CONNECTION WITH CHANGE IN CONTROL. For the sake of clarity, the parties note that the following provisions (among others) relate to the time period between the Agreement Date and the Expiration Date (as such term is defined in Section 22). (a) Executive understands that under various Employment Arrangements a "change in control" may be deemed to have occurred before the Effective Time and that Executive may have various rights to obtain benefits and payments before the Effective Time as a result of the occurrence or prospect of a change in control, because of his expected termination of employment, or otherwise. (b) Executive agrees and confirms, for the benefit of Chart and for the benefit of Ben Franklin, that, notwithstanding the provisions of any Employment Arrangement, he will not be entitled to receive, will not take any action to obtain, and will not accept, any payments or other benefits of any kind whatsoever between the Agreement Date and the Expiration Date other than: (i) the benefits to which he is specifically entitled pursuant to Section 3, Section 4 or Section 11 of this Agreement; - 3 - (ii) regular incremental payments of his base salary at the rates in effect on the Agreement Date; (iii) payment of a year-end bonus for 2004 in an amount not to exceed $40,000 (which amount Chart and Executive represent is consistent with past practice of Chart), to the extent voted by the Board of Directors of Chart; (iv) reimbursement in the ordinary course of reasonable and necessary business expenses; and (v) the continued participation of Executive in all of Chart's benefit plans and programs that are made available to Chart employees generally as of the Agreement Date, on the same terms in effect on the Agreement Date. (c) Chart agrees not to take any action that could result in Executive receiving, now or in the future, any benefit other than those specifically permitted under Section 6(b). 7. NO AMENDMENTS TO EMPLOYMENT ARRANGEMENTS. Chart and Executive agree that from and after the Agreement Date they will not (a) modify or amend, or permit any other person to modify or amend, any Employment Arrangement, or (b) adopt any new Employment Arrangement. 8. RELEASES. (a) For, and in consideration of the commitments made herein by Ben Franklin, Executive, for himself and for his heirs and assigns, does hereby release completely and forever discharge Ben Franklin and its subsidiaries, affiliates, stockholders, attorneys, officers, trustees, directors, agents, employees, successors and assigns, and any other party associated with Ben Franklin, to the fullest extent permitted by applicable law, from any and all claims, rights, demands, actions, liabilities, obligations, causes of action of any and all kind, nature and character whatsoever, known or which could be known, in any way connected with his employment by Chart or any of its subsidiaries (including in each case predecessors thereof), either as a director, officer or employee, or termination of such employment. Notwithstanding the foregoing, Executive does not release Ben Franklin from any obligations of Ben Franklin to Executive under (i) the Permitted Arrangements, (ii) this Agreement, (iii) the Consulting and Noncompetition Agreement or (iv) the right to receive the Merger Consideration on the terms set forth in the Merger Agreement. (b) For, and in consideration of the commitments made herein by Executive, Ben Franklin on behalf of itself and its related and affiliated entities, their respective predecessors, successors and assigns, does hereby release completely and forever discharge Executive and his successors, assigns, heirs and survivors, and any of them to the fullest extent permitted by applicable law, from any and all claims, rights, demands, actions, liabilities, obligations, causes of action of any and all kind, nature and character whatsoever, of which Ben Franklin has actual knowledge, in any way connected with his employment by or providing consulting services to Chart or any of its subsidiaries. Notwithstanding any other provisions of this Agreement, Ben Franklin does not release Executive (x) with respect to any claim for actual or potential violation of (or failure to conform with) applicable regulatory requirements or standards or (y) from any - 4 - obligations of Executive to Ben Franklin under (i) the Permitted Arrangements, (ii) this Agreement, or (iii) the Consulting and Noncompetition Agreement. The parties agree that "actual knowledge" of Ben Franklin shall be limited to matters known by its President or Chief Financial Officer and that Ben Franklin shall not be deemed to have "actual knowledge" of matters by reason of the fact that such matters were disclosed or contained in financial data in the Chart General Ledger presented and made available to Ben Franklin prior to the date hereof. 9. LIMITATION ON BENEFITS. The provisions of this Section 9 shall become effective as of the Agreement Date. (a) It is the intention of Executive, Chart and Ben Franklin that no payments by Ben Franklin or Chart to or for the benefit of Executive shall be non-deductible to Chart or Ben Franklin by reason of the operation of Section 280G of the Code, relating to parachute payments. It is the intention of the parties that the amount to be paid to Executive under this Agreement shall be not greater than the maximum amount which may be paid to Executive without causing any portion of such payment to be non-deductible to Chart or Ben Franklin by reason of the operation of Section 280G of the Code. (b) Chart agrees not to pay to Executive any amount that (when aggregated, as required by Section 280G of the Code with the Termination Payment) would be in excess of the maximum amount which may be paid to Executive without causing any portion of such payment to be non-deductible to Chart or Ben Franklin by reason of the operation of Section 280G of the Code. 10. REPAYMENT BY EXECUTIVE IN CERTAIN CIRCUMSTANCES. To the extent of any inconsistency between the provisions of Section 11 and this Section 10, the provisions of this Section 10 shall be controlling. (a) REDUCTION OR REPAYMENT. If Executive receives any Impermissible Payment (as such term is defined in Section 10(c)), such Impermissible Payment shall be reduced to the maximum amount which can be paid without triggering an Excise Tax payment by Executive and which can be deducted by Ben Franklin or Chart (as applicable). To the extent that an Impermissible Payment exceeding such maximum deductible amount has been made to or for the benefit of Executive, Executive agrees to refund such excess Impermissible Payments to Ben Franklin (promptly upon written request of Ben Franklin, which request shall be accompanied by a reasonably detailed explanation of the facts and related calculations relevant to such Impermissible Payments prepared by the Accounting Firm) with interest thereon at the applicable Federal Rate determined under Section 1274(d) of the Code, compounded annually, or at such other rate as may be required to the extent necessary so that no such Impermissible Payment shall trigger payment of an Excise Tax by Executive and shall be non-deductible to Ben Franklin or Chart by reason of the operation of said Section 280G. To the extent that there is more than one method of reducing an Impermissible Payment to bring it within the limitations of said Section 280G, Executive shall determine which method shall be followed, provided that if Executive fails to make such determination within forty-five (45) days after Ben Franklin or Chart have sent him written notice of the need for such reduction, Ben Franklin may determine the method of such reduction in its sole discretion. - 5 - (b) NO GROSS UP PAYMENTS WITH RESPECT TO IMPERMISSIBLE PAYMENTS. Notwithstanding any other provision of this Agreement, Ben Franklin shall have no obligation to make any Gross Up Payment (as defined in Section 11(a)) or other compensatory payment to Executive with respect to an Impermissible Payment. (c) IMPERMISSIBLE PAYMENTS. "IMPERMISSIBLE PAYMENT" shall be any Bank Payment (or any portion thereof) that is or would be in excess of the maximum amount which may be paid to Executive without triggering an Excise Tax payment by Executive or causing any portion of such Bank Payment to be non-deductible to Chart or Ben Franklin by reason of the operation of Section 280G of the Code, but only if such Bank Payment was in excess of such maximum amount because: (i) Such Bank Payment was made in violation of Section 3 or Section 9(b); or (ii) Chart provided information to Bancorp or the Accounting Firm, or Executive provided information to Chart or Bancorp or the Accounting Firm, that was incorrect or incomplete and such incorrect or incomplete information caused Bancorp or Chart to make a Bank Payment to or for the benefit of Executive on the basis of such incorrect or incomplete information; or (iii) Executive willfully or grossly negligently failed to perform under or breached (which failure or breach continued after Ben Franklin shall have given to Executive written notice by certified mail and a reasonable opportunity to cure, which in no event shall be less than ten days following receipt of such notice) his obligations under the Consulting and Noncompetition Agreement. 11. ADDITIONAL PAYMENTS UNDER SPECIFIED CIRCUMSTANCES. To the extent of any inconsistency between the provisions of this Section 11 and Section 10, the provisions of Section 10 shall be controlling. (a) In the event it shall be determined that any compensation payment or distribution by Chart or Ben Franklin to or for the benefit of Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (the "BANK PAYMENTS"), would be subject to the excise tax imposed by Section 4999 of the Code, or any interest or penalties are incurred by Executive with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the "EXCISE TAX"), then Executive shall be entitled to receive from Ben Franklin an additional payment (a "GROSS UP PAYMENT") such that the net amount retained by Executive, after deduction of any Excise Tax on the Bank Payments, any Federal, state, and local income tax, employment tax and Excise Tax upon the payment provided by this Section 11(a), and any interest and/or penalties assessed with respect to such Excise Tax and not after the deduction of any other taxes or amounts, shall be equal to the Bank Payments. (The Gross Up Payment is not intended to compensate Executive for any income taxes payable with respect to the Bank Payments.) (b) Subject to the provisions of Section 11(c), all determinations required to be made under this Section 11, including whether a Gross Up Payment is required and the amount of such - 6 - Gross Up Payment, shall be made by the Accounting Firm, which shall provide detailed supporting calculations both to Ben Franklin and Executive at such time as is reasonably requested by Ben Franklin or Executive. Ben Franklin shall pay the expenses of the Accounting Firm. For purposes of determining the amount of the Gross Up Payment, Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation applicable to individuals for the calendar year in which the Gross Up Payment is to be made, and state and local income taxes at the highest marginal rates of individual taxation in the state and locality of Executive's residence on the Effective Time, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes. Any determination by the Accounting Firm shall be binding upon Ben Franklin and Executive. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross Up Payments which will not have been made by Ben Franklin should have been made (an "UNDERPAYMENT"). In the event that Ben Franklin exhausts its remedies pursuant to Section 11(c) and Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred, consistent with the calculations required to be made hereunder, and any such Underpayment, and any interest and penalties imposed on the Underpayment and required to be paid by Executive in connection with the proceedings described in Section 11(c), shall be promptly paid by Ben Franklin to or for the benefit of Executive. (c) Executive shall notify Ben Franklin in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by Ben Franklin of the Gross Up Payment. Such notification shall be given as soon as practicable but no later than 10 business days after Executive knows of such claim and shall apprise Ben Franklin of the nature of such claim and the date on which such claim is requested to be paid. Executive shall not pay such claim prior to the expiration of the 30-day period following the date on which he gives such notice to Ben Franklin (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If Ben Franklin notifies Executive in writing prior to the expiration of such period that it desires to contest such claim, Executive shall: (i) give Ben Franklin any information reasonably requested by Ben Franklin relating to such claim, (ii) take such action in connection with contesting such claim as Ben Franklin shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney selected by Ben Franklin, (iii) cooperate with Ben Franklin in good faith in order effectively to contest such claim, and (iv) permit Ben Franklin to participate in any proceedings relating to such claim; provided, however, that Ben Franklin shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold Executive harmless, on an after-tax basis, for any Excise Tax or income tax, including interest and penalties with respect thereto, imposed as a result of - 7 - such representation and payment of costs and expenses. Without limitation on the foregoing provisions of this Section 11(c), Ben Franklin shall control all proceedings taken in connection with such contest and, at their sole option, may pursue or forego any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at their sole option, either direct Executive to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as Ben Franklin shall determine; provided, however, that if Ben Franklin directs Executive to pay such claim and sue for a refund, Ben Franklin shall advance the amount of such payment to Executive on an interest-free basis and shall indemnify and hold Executive harmless, on an after-tax basis, from any Excise Tax or income tax, including interest or penalties with respect thereto, imposed with respect to such advance or with respect to any imputed income with respect to such advance; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of Executive with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, Ben Franklin's control of the contest shall be limited to issues with respect to which a Gross Up Payment would be payable (determined without regard to the limitations on such payments imposed by Section 10) hereunder and Executive shall be entitled to settle or contest, as the case may be, any other issues raised by the Internal Revenue Service or any other taxing authority. (d) If, after the receipt by Executive of an amount advanced by Ben Franklin pursuant to Section 11(c), Executive becomes entitled to receive any refund with respect to such claim, Executive shall (subject to Ben Franklin's complying with the requirements of Section 11(c)) promptly pay to Ben Franklin the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by Executive of an amount advanced by Ben Franklin pursuant to Section 11(c), a determination is made that Executive shall not be entitled to any refund with respect to such claim and Ben Franklin does not notify Executive in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross Up Payment required to be paid. (e) If any dispute between Ben Franklin or Chart and Executive as to any of the amounts to be determined under this Section 11 or the method of calculating such amounts cannot be resolved by Ben Franklin and Executive, such determination shall be made by the Accounting Firm, whose decision shall be final and binding on all parties. (f) If Ben Franklin notifies the Executive that it does not desire to contest any claim concerning the imposition of an Excise Tax or if Ben Franklin fails to notify timely the Executive in writing that it desires to contest such claim, or if the claim is resolved and an Excise tax is owed by the Executive, the Executive shall be entitled to receive the Gross Up Payment (except to the extent that an Impermissible Payment is involved). 12. RESOLUTION OF DISPUTES; SEVERABILITY. - 8 - (a) Except as provided pursuant to Section 11(e), any dispute or controversy arising under or in connection with this Agreement may, at either Ben Franklin's or Executive's option, be settled exclusively by arbitration in Boston, Massachusetts in accordance with the rules of the American Arbitration Association ("AAA") then in effect and (with respect to the costs of the arbitration) at Ben Franklin's expense. Judgment may be entered on the arbitrator's award in any court having jurisdiction. The prevailing party in any such arbitration shall be entitled to recover his or its reasonable attorney's fees and related out-of-pocket expenses incurred in connection with such arbitration. (b) Notwithstanding the applicability of the AAA's Emergency Interim Relief Procedures, a party may initiate an action in a court of competent jurisdiction and may seek interim measures (including without limitation temporary restraining orders and preliminary injunctions) necessary to protect the interests of such party pending the arbitration. In such case, the court shall be free to act on all requests for interim measures from time to time, but shall otherwise stay the action pending the arbitration (which the court may compel). If any such action is still pending at the time of the arbitrator's award, either party may apply to such court for entry of judgment on, and enforcement of, the arbitrator's award, including without limitation any equitable relief awarded by the Arbitrator's. (c) The parties hereby request that any arbitrator who may be requested to enforce this Agreement do so in accordance with its specific terms. However, if it should for some reason be contrary to public policy to effectuate the intentions of the parties in interpreting this Agreement, the parties have agreed as follows: (i) In the event that the arbitrator determines that any provision of this Agreement is invalid or unenforceable by reason of its extending for too great a period of time or over too large a geographic area or over too great a range of activities, the parties agree that the arbitrator shall have the power to reduce the scope, duration, or geographic area of the term or provision, to delete specific words or phrases, or to replace any invalid or unenforceable term or provision with a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision, and this Agreement shall be enforceable as so modified after the expiration of the time within which the decision may be appealed. (ii) If, after application of the immediately preceding Section, the arbitrator shall determine that any provision of this Agreement is invalid, illegal or otherwise unenforceable, the validity, legality and enforceability of the other provisions of this Agreement shall not be affected thereby. Any invalid, illegal or unenforceable provision of this Agreement shall be severable, and after any such severance, all other provisions hereof shall remain in full force and effect. 13. REPRESENTATIONS AND WARRANTIES. The parties hereto represent and warrant to each other that they have carefully read this Agreement and consulted with respect thereto with their respective counsel, and that each of them fully understands the content of this Agreement and its legal effect. Each party hereto also represents and warrants that this Agreement is a legal, valid and binding obligation of such party which is enforceable against such party in accordance with its terms. - 9 - 14. SUCCESSORS AND ASSIGNS. This Agreement will inure to the benefit of, and be binding upon, Executive and his heirs and assigns, Chart, and upon Ben Franklin, including any successor to Ben Franklin by merger or consolidation or any other change in form or any other person or firm or corporation to which all or substantially all of the assets and business of Ben Franklin may be sold or otherwise transferred. This Agreement may not be assigned by any party hereto without the consent of the other parties. 15. NOTICES. Any communication to a party required or permitted under this Agreement, including any notice, direction, designation, consent, instruction, objection or waiver, shall be in writing and shall be deemed to have been given at such time as it is delivered personally, or five (5) days after mailing if mailed, postage prepaid, by registered or certified mail, return receipt requested, addressed to such party at the address listed below or at such other address as one such party may, by written notice, specify to the other party or parties, as applicable: If to Executive: Richard E. Bolton, Jr. 7 Apple Blossom Way Stow, Massachusetts 01775 If to Ben Franklin: Benjamin Franklin Bancorp, M.H.C. 58 Main Street Franklin, Massachusetts 02038-0927 Attention: President If to Chart: Chart Bank 295 Weston Street Waltham, Massachusetts 02453 16. WITHHOLDING. Each of Chart and Ben Franklin may withhold from any amounts payable under this Agreement such federal, state, local or foreign taxes as shall be required to be withheld pursuant to any applicable law or regulation. 17. ENTIRE AGREEMENT; SEVERABILITY. (a) This Agreement contains the entire agreement of the parties relating to the subject matter hereof and shall supersede in its entirety any and all prior agreements or understandings, whether written or oral, between Chart and Executive relating to the subject matter hereof, except to the extent that Section 4, Section 5, or Section 6(b) of this Agreement expressly preserves existing rights of Executive. In reaching this Agreement, no party has relied upon any representation or promise except those set forth herein and in the Consulting and Noncompetition Agreement. - 10 - (b) Any term or provision of this Agreement which is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement or affecting the validity or enforceability of any of the terms or provisions of this Agreement in any other jurisdiction. If any provision of this Agreement is so broad as to be unenforceable, the provision shall be interpreted to be only so broad as is enforceable. In all such cases, the parties shall use their reasonable best efforts to substitute a valid, legal and enforceable provision which, insofar as practicable, implements the original purposes and intents of this Agreement. 18. WAIVER. Failure to insist upon strict compliance with any of the terms, covenants or conditions hereof shall not be deemed a waiver of such term, covenant or condition. A waiver of any provision of this Agreement must be made in writing, designated as a waiver and signed by the party against whom its enforcement is sought. Any waiver or relinquishment of any right or power hereunder at any one or more times shall not be deemed a waiver or relinquishment of such right or power at any other time or times. 19. COUNTERPARTS AND FACSIMILE SIGNATURES. This Agreement and all Exhibits, Schedules and Appendices may be executed in two or more counterparts, all of which shall be considered one and the same agreement and shall become effective when two or more counterparts have been signed by each of the parties and delivered to the other parties, it being understood that all parties need not sign the same counterpart. Facsimile execution and delivery of this Agreement by any of the parties shall be legal, valid and binding execution and delivery of such document for all purposes. 20. GOVERNING LAW. This Agreement shall be governed by and construed and enforced in accordance with the laws of The Commonwealth of Massachusetts applicable to agreements made and to be performed entirely within such jurisdiction. 21. HEADINGS. The headings of sections in this Agreement are for convenience of reference only and are not intended to qualify the meaning of any section. Any reference to a section number shall refer to a section of this Agreement, unless otherwise stated. 22. EFFECTIVENESS. This Agreement shall become effective on the Agreement Date and shall remain in effect until the Expiration Date. The Expiration Date shall occur on the first to occur of (a) the date which is seven (7) years after the Agreement Date, and (b) such date as the Merger Agreement is terminated by the parties thereto in accordance with its terms prior to consummation of the transactions contemplated thereby. 23. AMENDMENT. This Agreement may not be amended in any respect except by means of a written agreement duly executed by Executive and by an authorized officer of each of Ben Franklin and Chart. ******* - 11 - IN WITNESS WHEREOF, each of the undersigned has entered into this Agreement as of the day and year first above written. BENJAMIN FRANKLIN BANCORP, M.H.C. EXECUTIVE /s/ Richard E. Bolton, Jr. By: /s/ Thomas R. Venables - ----------------------------- ------------------------------ Richard E. Bolton, Jr. Name: Thomas R. Venables Title: President BENJAMIN FRANKLIN SAVINGS BANK By: /s/ Thomas R. Venables ------------------------------ Name: Thomas R. Venables Title: President CHART BANK, A COOPERATIVE BANK By: /s/ Dean L. Kenney ------------------------------ Name: Dean L. Kenney Title: Treasurer and Chief Financial Officer - 12 - EX-10.7.2 19 b52576bfexv10w7w2.txt EX-10.7.2 CONSULTING AND NONCOMPETITION AGREEMENT WITH RICHARD E. BOLTON, JR. EXHIBIT 10.7.2 RICHARD P. BOLTON, JR. September 1, 2004 Benjamin Franklin Bancorp, M.H.C. 58 Main Street P.O. Box 309 Franklin, Massachusetts 02038-0927 Attn: Thomas R. Venables, President and CEO RE: CONSULTING AND NONCOMPETITION AGREEMENT Gentlemen: I am writing to confirm the arrangement we have agreed upon with respect to certain assurances you have requested me to provide to Benjamin Franklin Bancorp, M.H.C. and its affiliates ("YOU" or "BANCORP"). I am a stockholder of, and have served as, President and Chief Executive Officer of Chart Bank, a Co-operative Bank ("CHART"). As you know, Chart is about to enter into an Agreement and Plan of Merger dated as of the date hereof (the "MERGER AGREEMENT") pursuant to which Chart will be acquired by Bancorp. Capitalized terms used and not defined in this Agreement shall have the meanings defined in the Merger Agreement. We have agreed as follows: 1. BACKGROUND. I have served as President and Chief Executive Officer of Chart since its reorganization in 1996 from a mutual to a stock institution in a supervisory stock conversion and prior to that time I served as President. During my tenure, Chart has achieved substantial growth. As a result of my employment, I have acquired unique and substantial knowledge concerning the business of providing banking services in the highly competitive market area served by Chart (the "BUSINESS"), as well as confidential and proprietary information concerning the Business and Chart. In order to induce you to enter into the Merger Agreement, you have requested me to provide you with certain agreements and assurances. By means of this Agreement, I am doing so. 2. CONSULTING SERVICES. You have requested that I provide consulting services to you during the one-year period next following the Closing Date under the Merger Agreement (the "CONSULTING PERIOD") with respect to the Business. I hereby agree to serve Bancorp as an independent consultant to perform such services related to the Business as Bancorp may request me to provide from time to time during the Consulting Period (the "CONSULTING SERVICES"). All such Consulting Services shall be provided to Bancorp on the terms and conditions set forth in this Agreement. While performing Consulting Services, I shall comply with all rules, procedures and standards promulgated from time to time by Bancorp with regard to my conduct and my access to and use of Bancorp's property, equipment and facilities. I understand that my Consulting Services may be provided in person, telephonically, electronically or by correspondence to the extent appropriate under the circumstances. 3. COMPENSATION. My compensation for all services to be performed under this Agreement shall be $150,000 per year, payable no less often than monthly in arrears during the Consulting Period. In addition, Bancorp shall reimburse me for travel and other expenses incurred in connection with the services provided pursuant to this Agreement, subject to the policies of Bancorp with respect to reimbursement of employee expenses. All payments hereunder shall, at my direction, be made to any entity I may establish from time to time in connection with my performance of consulting services. 4. LOCATION OF CONSULTING SERVICES. I agree to provide Consulting Services in the market area of Chart prior to its acquisition by Bancorp. I agree to consult at Bancorp's offices or at another location within Bancorp's Immediate Market Area (as defined in Section 7(a)) mutually agreed to, up to a maximum of five (5) business days per month. 5. NATURE OF CONSULTING SERVICES. While President and Chief Executive Officer, I was integrally involved in the development of a business plan for Chart, which resulted in Chart remaining competitive in a highly competitive market area. Chart's market area is at a considerable geographic distance from the market areas served by Bancorp Bank, and such market area has demographics and competitive factors that are significantly different from those in the market areas served by Bancorp Bank. To assist Bancorp in managing the necessary knowledge and experience to successfully operate in Chart's market area, I agree to provide Bancorp with: (a) CONSULTING SERVICES REGARDING OPERATION OF CSSI BUSINESS MODEL. Bancorp is not familiar with the operation of CSSI, Chart's subsidiary which is in the business of managing cash for ATM's under contract. I will consult with Bancorp management to provide guidance as to the operation of the CSSI portion of the Business and as to CSSI generally. (b) CONSULTING SERVICES REGARDING MARKET AREA OF CHART. I will consult with Bancorp management to provide the expertise that I have gained during my tenure as the chief executive of Chart regarding Chart's market area. I will work with management to continue Chart's branch offices' growth in the area of deposits and loans and in their efforts to have Bancorp become competitive in Chart's market area. In addition, I will work with Bancorp management in serving the needs of the low- and moderate-income families in Chart's market area. (c) CONSULTING SERVICES REGARDING MARKETING AND BUSINESS HISTORY. I will provide Bancorp with a full background of the historical operations of Chart to the best of my knowledge, including information on the marketing approaches that Chart has used to retain and attract customers. (d) CONSULTING SERVICES REGARDING INTEGRATION OF OPERATIONS AND OF PERSONNEL. I will consult with Bancorp to assist in the successful integration of Chart's operations with Bancorp Bank's operations. I will work with Bancorp management in their efforts to - 2 - ensure that those Chart employees who become employees of Bancorp Bank continue as valuable employees who contribute to the overall success and growth of Bancorp and are successfully integrated into Bancorp's corporate culture. (e) INTRODUCTION TO COMMERCIAL BORROWERS. A significant source of Chart's success has been derived from its uniquely favorable relationships with its commercial borrowers, especially including borrowers owning multi-family apartment units in Chart's market area. In the course of my activities as an officer of Chart, I have been directly involved with the administration of Chart's business with these customers. I will endeavor to assist Bancorp in ensuring that these customers remain customers of Bancorp Bank after the Merger. 6. INDEPENDENT CONTRACTOR. In furnishing such services, I understand that I will at all times be acting as an independent contractor of Bancorp, acting for Bancorp only on a temporary basis, during the Consulting Period. As such, I understand that my relationship with Bancorp is only intended to last for a defined period of time so as to permit Bancorp to become fully conversant with the operations of the Business and to provide for a transition pursuant to which Chart customers will become accustomed to dealing with individuals other than me in connection with the Business. I understand and agree that I will not be an employee of Bancorp and will not, by reason of this Agreement or by reason of my services to Bancorp, be entitled to participate in, or to receive any benefit or right under, any of Bancorp's employee benefit or welfare plans, except to the extent applicable to me as a Director of Bancorp. I will be responsible for paying all Social Security, withholding and other taxes required by law to be paid as and when the same become due and payable. 7. NONCOMPETITION AND NONSOLICITATION. (a) NONCOMPETITION. During the Consulting Period, I will not, except as provided in the second paragraph of this Section 7(a), (i) alone, or as a member, employee, agent, consultant, advisor, independent contractor, partner, officer, director, stockholder, investor, lender or guarantor of any corporation, partnership or other entity, or in any other capacity, directly or indirectly compete in Massachusetts with the business conducted by Chart, Bancorp, Bancorp Bank, or any affiliate of any of the foregoing, or (ii) directly or indirectly become a director, officer, employee, principal, agent, consultant or independent contractor of any insured depository institution, trust company or parent holding company of any such institution or company which has an office in Massachusetts (a "COMPETING BUSINESS") other than Bancorp or any of its subsidiaries, provided, however, that this provision shall not prohibit me from owning bonds, non-voting preferred stock or up to four percent (4%) of the outstanding common stock of any such entity if such common stock is publicly traded. Notwithstanding the foregoing, I will be entitled to act as a consultant or independent contractor for an insured depository institution, trust company or parent holding company that is headquartered outside of the Immediate Market Area, as long as I do not perform such consulting or contracting services from an office that is within the Immediate Market Area or with respect to such institution's or company's operations - 3 - within the Immediate Market Area. "Immediate Market Area" means the cities and towns listed on Exhibit A. (b) NONSOLICITATION. During the Consulting Period and for a one-year period thereafter, I will not (i) solicit or induce, or cause others to solicit or induce, any employee of Bancorp or any of its subsidiaries to leave the employment of such entities, (ii) hire or attempt to hire any employee of Bancorp or any of its subsidiaries or assist in such hiring by any other Person, or (iii) solicit or encourage (whether by mail, telephone, personal meeting or any other means) any customer of Bancorp or any of its subsidiaries to transact business of the type conducted by Bancorp with any other entity, whether or not a Competing Business, or to reduce or refrain from doing any business with Bancorp or its subsidiaries, or interfere with or damage (or attempt to interfere with or damage) any relationship between Bancorp or its subsidiaries and any such customers. 8. TERMINATION BY BANCORP. I understand that my relationship with Bancorp may only be terminated by Bancorp for "Cause," after written notice specifying the basis for Bancorp's belief that there is a basis for termination for Cause. For purposes of this Agreement, termination for Cause shall mean termination because of my personal dishonesty, willful misconduct, any breach of fiduciary duty involving personal profit, intentional failure to perform stated duties, willful violation of any federal or state law, rule, regulation (other than traffic violations or similar offenses), final cease and desist order or material breach of any provision of this Agreement. 9. NO DISCLOSURE OF CONFIDENTIAL INFORMATION. While providing the Consulting Services to Bancorp and for a period of five years thereafter, I shall not, directly or indirectly, use any Confidential Information (as hereinafter defined) other than pursuant to my provision of the Consulting Services by and for the benefit of Bancorp, or disclose to anyone outside of Bancorp any such Confidential Information. The term "CONFIDENTIAL INFORMATION" as used throughout this Agreement shall mean all names of customers of Chart, Bancorp or any subsidiary of either (each, a "BANCORP ENTITY" and collectively, the "BANCORP ENTITIES") and all trade secrets, proprietary information and other data or information (and any tangible evidence, record or representation thereof), whether prepared, conceived or developed by a consultant or employee of a Bancorp Entity (including myself) or received by a Bancorp Entity from an outside source, which (i) is in the possession of a Bancorp Entity (whether or not the property of a Bancorp Entity) and which is maintained in secrecy or confidence by a Bancorp Entity or which might permit any Bancorp Entity or its customers to obtain a competitive advantage over competitors who do not have access to such trade secrets, proprietary information, or other data or information. Notwithstanding the foregoing, the term Confidential Information shall not apply to information which any Bancorp Entity or employee thereof (other than myself) has voluntarily disclosed to the public without restriction or which has otherwise lawfully entered the public domain. I understand that a Bancorp Entity from time to time has in its possession information which represents information which is claimed by others to be proprietary and which such Bancorp Entity has agreed to keep confidential. I agree that all such information shall be Confidential Information for purposes of this Agreement. 10. ALL CONFIDENTIAL INFORMATION PROPERTY OF BANCORP. I agree that all originals and all copies of materials containing, representing, evidencing, recording or constituting any - 4 - Confidential Information, however and whenever produced (whether by myself or others), shall be the sole property of Bancorp. 11. RESOLUTION OF DISPUTES; SEVERABILITY. (a) Except as provided by Section 11(b), any dispute or controversy arising under or in connection with this Agreement may, at either Ben Franklin's or my option, be settled exclusively by arbitration in Boston, Massachusetts in accordance with the rules of the American Arbitration Association ("AAA") then in effect and (with respect to the costs of the arbitration) at Ben Franklin's expense. Judgment may be entered on the arbitrator's award in any court having jurisdiction. The prevailing party in any such arbitration shall be entitled to recover his or its reasonable attorney's fees and related out-of-pocket expenses incurred in connection with such arbitration. (b) Notwithstanding the applicability of the AAA's Emergency Interim Relief Procedures, a party may initiate an action in a court of competent jurisdiction and may seek interim measures (including without limitation temporary restraining orders and preliminary injunctions) necessary to protect the interests of such party pending the arbitration. In such case, the court shall be free to act on all requests for interim measures from time to time, but shall otherwise stay the action pending the arbitration (which the court may compel). If any such action is still pending at the time of the arbitrator's award, either party may apply to such court for entry of judgment on, and enforcement of, the arbitrator's award, including without limitation any equitable relief awarded by the Arbitrator's. (c) The parties hereby request that any arbitrator who may be requested to enforce this Agreement do so in accordance with its specific terms. However, if it should for some reason be contrary to public policy to effectuate the intentions of the parties in interpreting this Agreement, the parties have agreed as follows: (i) In the event that the arbitrator determines that any provision of this Agreement is invalid or unenforceable by reason of its extending for too great a period of time or over too large a geographic area or over too great a range of activities, the parties shall use their reasonable best efforts to substitute a valid, legal and enforceable provision which, insofar as practicable, implements the original purposes and intents of this Agreement. If the parties are unable to agree on such a substitute provision, the arbitrator shall have the power to reduce the scope, duration, or geographic area of the term or provision, to delete specific words or phrases, or to replace any invalid or unenforceable term or provision with a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision, and this Agreement shall be enforceable as so modified after the expiration of the time within which the decision may be appealed. (ii) If, after application of the immediately preceding Section, the arbitrator shall determine that any provision of this Agreement is invalid, illegal or otherwise unenforceable, the validity, legality and enforceability of the other provisions of this Agreement shall not be affected thereby. Any invalid, illegal or unenforceable provision - 5 - of this Agreement shall be severable, and after any such severance, all other provisions hereof shall remain in full force and effect. 12. NOTICES. Any notice given pursuant to this Agreement shall be in writing and shall be sufficiently given if personally delivered or sent by registered or certified mail, return receipt requested, postage prepaid, to the parties at their addresses set forth in this Agreement or to such other address as any party may hereafter designate to the others by like notice. Notices shall be deemed given when personally delivered, or, if mailed, on the earlier of (i) the third day after being deposited in the mails as aforesaid and (ii) the date on which received. The foregoing provisions shall not, however, prohibit the giving of actual written notice in any other manner. 13. ENTIRE AGREEMENT/MODIFICATION/WAIVER. This Agreement sets forth the entire understanding between the parties relating to the subject matter hereof and supersedes all prior correspondence, conversations and memoranda or other writings between them with respect to such subject matter. No promises, covenants or representations of any character or nature other than those expressly stated herein have been made to induce either party to enter into this Agreement. Neither this Agreement nor any part hereof may be modified, amended, terminated, waived or discharged except by a writing duly signed by the party sought to be bound. Failure by Bancorp to insist upon strict compliance with any of the terms, covenants, or conditions hereof shall not be deemed a waiver of such terms, covenants or conditions. 14. TERM; SURVIVAL OF TERMS. The term of this Agreement shall be for one year following the Closing Date of the Merger. Except for my obligations under (i) Section 7(b) hereof, which shall extend for one year after the expiration of this Agreement, and (ii) Section 9 hereof, which shall extend for five years after the expiration of this Agreement, my obligations hereunder shall not survive the expiration of this Agreement. 15. GOVERNING LAW. This Agreement shall be governed by, and construed and enforced in accordance with, the substantive laws of The Commonwealth of Massachusetts without regard to its principles of conflicts of laws. This Agreement is executed under seal. 16. COUNTERPARTS. This Agreement may be executed in two or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. Facsimile execution and delivery of this Agreement by any party shall be legal, valid and binding execution and delivery for all purposes. 17. INTERPRETATION. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. 18. EFFECTIVENESS. Notwithstanding anything herein to the contrary, the effectiveness of this Agreement shall be subject to consummation of the Merger in accordance with the terms of the Merger Agreement, as the same may be amended by the parties thereto in accordance with its terms. - 6 - Please confirm that the foregoing represents our mutual understanding by signing and returning to me a copy of this Agreement. /s/ Richard E. Bolton, Jr. --------------------------- Richard E. Bolton, Jr. 7 Apple Blossom Way Stow, MA 01775 Agreed to and Accepted: BENJAMIN FRANKLIN BANCORP, M.H.C. By:/s/ Thomas R. Venables ------------------------------ Thomas R. Venables President and CEO - 7 - Exhibit A Immediate Market Area Arlington Milford Ashland Millis Avon N. Attleboro Bellingham Natick Belmont Needham Brookline Newton Cambridge Norwood Canton Randolph Dedham Sharon Dover Sherborn Foxborough Southborough Framingham Stoughton Franklin Sudbury Holliston Walpole Hopkinton Watertown Lexington Wayland Lincoln Wellesley Mansfield Westborough Marlborough Weston Medfield Westwood Medway Wrentham
- 8 - EX-10.8 20 b52576bfexv10w8.txt EX-10.8 SPECIAL TERMINATION AGREEMENT BETWEEN ALFRED F. ODOARDI AND CHART EXHIBIT 10.8 SPECIAL TERMINATION AGREEMENT This Special Termination Agreement is made this 20th day of August, 2004 by and between Chart Bank, a Cooperative Bank, with its headquarters located in Waltham, Massachusetts (the "Bank"), and Alfred J. Odoardi (the "Executive"), an individual presently employed as an officer of the Bank. 1. Purpose. In order to allow the Executive to consider the prospect of a Change in Control (as defined in Section 2) in an objective manner and in consideration of the services rendered and to be rendered by the Executive to the Bank and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by the Bank, the Bank is willing to provide, subject to the terms of this Agreement, certain severance benefits to protect the Executive from the consequences of a Terminating Event (as defined in Section 3) occurring subsequent to a Change in Control. 2. Change in Control. A "Change in Control" shall be deemed to have occurred in any one of the following events: (a) any "person," as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934 (the "Act") (other than the Bank, any of its direct or indirect subsidiaries, or any trustee, fiduciary or other person or entity holding securities under any employee benefit plan or trust of the Bank, any of its direct or indirect subsidiaries or any stockholder who, as of the date hereof, owns any outstanding shares of stock of the Bank), together with all "affiliates" and "associates" (as such terms are defined in Rule 12b-2 under the Act) of such person, shall become the "beneficial owner" (as such term is defined in Rule 13d-3 under the Act), directly or indirectly, of securities of the Bank representing 50% or more of the combined voting power of the Bank's then outstanding securities having the right to vote in an election of the Bank's Board of Directors ("Voting Securities") (in such case other than as a result of an acquisition of securities directly from the Bank); or (b) persons who, as of the date hereof, constitute the Bank's Board of Directors (the "Incumbent Directors") cease for any reason, including, without limitation, as a result of a tender offer, proxy contest, merger or similar transaction, to constitute at least a majority of the Board, provided that any person becoming a director of the Bank subsequent to the date hereof whose election or nomination for election was approved by a vote of at least a majority of the Incumbent Directors shall, for purposes of this Agreement, be considered an Incumbent Director; or (c) consummation of a merger or consolidation of the Bank with any other corporation or other entity, other than (1) a merger or a consolidation which would result in the voting securities of the Bank outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 50% of the combined voting power of the voting securities of the Bank or such surviving entity outstanding immediately after such merger or consolidation or (2) a merger or consolidation effected to implement a recapitalization of the Bank (or similar transaction) in which no "person" (as hereinabove defined) acquires more than 50% of the combined voting power of the Bank's then outstanding securities; or (d) the stockholders of the Bank approve a plan of complete liquidation of the Bank or an agreement for the sale or disposition by the Bank of all or substantially all of the Bank's assets. Notwithstanding the foregoing, a "Change in Control" shall not be deemed to have occurred for purposes of the foregoing clause (a), solely as a result of an acquisition of securities by the Bank which, by reducing the number of shares of Voting Securities outstanding, increases the proportionate voting power represented by the Voting Securities beneficially owned by any person to 50% or more of the combined voting power of all then outstanding Voting Securities; provided, however, that if any person referred to in the preceding clause shall thereafter become the beneficial owner of any additional shares of Voting Securities (other than pursuant to a stock split, stock dividend, or similar transaction or as a result of an acquisition of securities directly from the Bank) and immediately thereafter beneficially owns 50% or more of the outstanding Voting Securities, then a Change in Control shall be deemed to have occurred for purposes of the foregoing clause (a). 3. Terminating Event. A "Terminating Event" shall mean termination by the Bank of the employment of the Executive with the Bank for any reason other than (a) death, (b) disability, or (c) Cause. Only the following shall constitute "Cause" for such termination. (i) dishonest statements or acts of the Executive with respect to the Bank or successor institution; (ii) the commission by or indictment of the Executive for (A) a felony or (B) any misdemeanor involving moral turpitude, deceit, dishonesty or fraud ("indictment," for these purposes, meaning an indictment, probable cause hearing or any other procedure pursuant to which an initial determination of probable or reasonable cause with respect to such offense is made); (iii) failure to perform to the reasonable satisfaction of the Board of Directors a substantial portion of the Executive's duties and responsibilities assigned or delegated under this Agreement, other than as a result of sickness, accident, disability or similar cause beyond the control of the Executive, which failure continues, in the reasonable judgment of the Board of Directors, after written notice given to the Executive by the Board of Directors; (iv) gross negligence, willful misconduct or insubordination of the Executive with respect to the Employer or any successor institution; or (v) material breach by the Executive of any of the Executive's obligations under this Agreement. 2 4. Termination Benefits. Subject to the provisions of Section 5 below, in the event that a Terminating Event occurs after a Change in Control, the Bank shall provide to the Executive the following termination benefits ("Termination Benefits"): (a) continuation of the Executive's base salary at the rate in effect immediately before the Change in Control or immediately before the Terminating Event, whichever is higher, for a period of eighteen (18) months from the date of the Terminating Event; (b) Continuation of medical benefits at the level in effect on, and at the same out-of-pocket cost to the Executive as of, the date of such Terminating Event, for a period of eighteen (18) months; and (c) full vesting of all unexercisable stock options held by the Executive on the date of the Terminating Event. 5. Limitation on Termination Benefits. (a) It is the intention of the Executive and of the Bank that no payments by the Bank to or for the benefit of the Executive under this Agreement and/or any other agreement or plan pursuant to which the Executive is entitled to receive payments or benefits shall be non-deductible to the Bank by reason of the operation of Section 280G of the Internal Revenue Code of 1986, as amended (the "Code") relating to parachute payments. Accordingly, and notwithstanding any other provision of this Agreement or any such agreement or plan, if by reason of the operation of said Section 280G, any such payments exceed the amount which can be deducted by the Bank in the aggregate, such payments shall be reduced to the maximum amount which can be deducted by the Bank. To the extent that payments exceeding such maximum deductible amount have been made to or for the benefit of the Executive, such excess payments shall be refunded to the Bank with interest thereon at the applicable Federal Rate determined under Section 1274(d) of the Code, compounded annually, or at such other rate as may be required in order that no such payments shall be non-deductible to the Bank by reason of the operation of said Section 280G. To the extent that there is more than one method of reducing the payments to bring them within the limitations of said Section 280G, the Executive shall determine which method shall be followed, provided that if the Executive fails to make such determination within 45 days after the Bank has sent him written notice of the need for such reduction, the Bank may determine the method of such reduction in its sole discretion. (b) If any dispute between the Bank and the Executive as to any of the amounts to be determined under this Section 5, or the method of calculating such amounts, cannot be resolved by the Bank and the Executive, either the Bank or the Executive after giving three days' written notice to the other, may refer the dispute to a firm of independent certified public accountants selected jointly by the Bank and the Executive. The determination of such firm as to the amount to be determined under Section 5(a) and the method of calculating such amounts shall be final and binding on both the Bank and the Executive. The Bank shall bear the costs of any such determination. 3 6. Unauthorized Disclosure. (a) Confidential Information. The Executive acknowledges that in the course of his employment with the Bank (and, if applicable, its predecessors), he has been allowed to become, and will continue to be allowed to become, acquainted with the Bank's business affairs, information, trade secrets, and other matters which are of a proprietary or confidential nature, including but not limited to the Bank's and its affiliates' and predecessors' operations, business opportunities, price and cost information, finance, customer information, business plans, various sales techniques, manuals, letters, notebooks, procedures, reports, products, processes, services, and other confidential information and knowledge (collectively the "Confidential Information") concerning the Bank's and its affiliates' and predecessors' business. The Bank agrees to provide on an ongoing basis such Confidential Information as the Bank deems necessary or desirable to aid the Executive in the performance of his duties. The Executive understands and acknowledges that such Confidential Information is confidential, and he agrees not to disclose such Confidential Information to anyone outside the Bank except to the extent that (i) the Executive deems such disclosure or use reasonably necessary or appropriate in connection with performing his duties on behalf of the Bank; (ii) the Executive is required by order of a court of competent jurisdiction (by subpoena or similar process) to disclose or discuss any Confidential Information, provided that in such case, the Executive shall promptly inform the Bank of such event, shall cooperate with the Bank in attempting to obtain a protective order or to otherwise restrict such disclosure, and shall only disclose Confidential Information to the minimum extent necessary to comply with any such court order; (iii) such Confidential Information becomes generally known to and available for use in the Bank's industry (the "Banking Industry"), other than as a result of any action or inaction by the Executive; or (iv) such information has been rightfully received by a member of the Banking Industry or has been published in a form generally available to the Banking Industry prior to the date the Executive proposes to disclose or use such information. The Executive further agrees that he will not during employment and/or at any time thereafter use such Confidential Information in competing, directly or indirectly, with the Bank. At such time as the Executive shall cease to be employed by the Bank, he will immediately turn over to the Bank all Confidential Information, including papers, documents, writings, electronically stored information, other property, and all copies of them provided to or created by him during the course of his employment with the Bank. (b) Heirs, successors, and legal representatives. The foregoing provisions of this Section 6 shall be binding upon the Executive's heirs, successors, and legal representatives. The provisions of this Section 6 shall survive the termination of this Agreement for any reason. 7. Covenant Not to Compete. In consideration for the benefits provided under the terms of this Agreement and as a means to aid in the performance and enforcement of the terms of the provisions of Section 6 hereof, the Executive agrees that: (a) during the term of the Executive's employment with the Bank and for a period of eighteen (18) months thereafter, regardless of the reason for termination of employment, the Executive will not, directly or indirectly, as an owner, director, principal, agent, officer, employee, partner, consultant, servant, or otherwise, carry on, operate, manage, control, or become involved in any manner with any business, operation, corporation, partnership, association, agency, or other person or entity which is engaged in a business that is competitive with any of the Bank's products which are produced by the Bank or any affiliate of the Bank as of the date of the Executive's termination of employment with the Bank, in any area or territory 4 in which the Bank or any affiliate of the Bank conducts operations; provided, however, that the foregoing shall not prohibit the Executive from owning up to one percent (1%) of the outstanding stock of a publicly held company engaged in the banking industry; and (b) during the term of the Executive's employment with the Bank and for a period of eighteen (18) months thereafter, regardless of the reason for termination of employment, the Executive will not directly or indirectly solicit or induce any present or future employee of the Bank or any affiliate of the Bank to accept employment with the Executive or with any business, operation, corporation, partnership, association, agency, or other person or entity with which the Executive may be associated, and the Executive will not employ or cause any business, operation, corporation, partnership, association, agency, or other person or entity with which the Executive may be associated to employ any present or future employee of the Bank without providing the Bank with ten (10) days' prior written notice of such proposed employment. Should the Executive violate any of the provisions of this Section 7, then in addition to all other rights and remedies available to the Bank at law or in equity, the duration of this covenant shall automatically be extended for the period of time from which the Executive began such violation until he permanently ceases such violation. 8. Employment Status. This Agreement is not an agreement for the employment of the Executive and shall confer no rights on the Executive except as herein expressly provided. During the course of his employment with the Bank, the Executive shall be entitled to receive a monthly car allowance of $500.00. 9. Term. This Agreement shall take effect on the day first above written, and shall terminate upon the earlier of (a) the termination by the Bank of the employment of the Executive after a Change in Control because of death, disability or Cause, or (b) the resignation or termination of the Executive for any reason. 10. Withholding. All payments made by the Bank under this Agreement shall be net of any tax or other amounts required to be withheld by the Bank under applicable law. 11. Arbitration of Disputes. Any controversy or claim arising out of or relating to this Agreement or the breach thereof or otherwise arising out of the Executive's employment or the termination of that employment (including, without limitations, any claims of unlawful employment discrimination whether based on age or otherwise) shall, to the fullest extent permitted by law, be settled by arbitration in any forum and form agreed upon by the parties, or in the absence of such an agreement, under the auspices of the American Arbitration Association ("AAA") in accordance with the Employment Dispute Resolution Rules of the AAA, including, but not limited to, the rules and procedures applicable to the selection of arbitrators. Judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. This Section 11 shall be specifically enforceable. Notwithstanding the foregoing, this Section 11 shall not preclude either party from pursuing a court action for the sole purpose of obtaining a temporary restraining order or a preliminary injunction in circumstances in which such relief is appropriate; provided that any other relief shall be pursued through an arbitration proceeding pursuant to this Section 11. In the event that it shall be necessary or desirable for the 5 Executive to retain legal counsel and/or incur other costs and expenses in connection with the Executive's pursuit of any claims under this Agreement, the Bank shall pay (or the Executive shall be entitled to recover from the Bank, as the case may be) the Executive's reasonable attorneys' fees and other reasonable costs and expenses in connection with the pursuit of said claims (including the Executive's enforcement of any arbitration award in court) regardless of the final outcome, unless and to the extent the arbitrators shall determine that under the circumstances recovery by the Executive of all or a part of any such fees and costs and expenses would be unjust. This arbitration provision shall not be used for matters of the type referred to in Section 5(b), except to settle the selection of the accounting firm described in said section in the event that the Bank and the Executive cannot agree on the selection. 12. Assignment; Successors and Assigns, etc. Neither the Bank nor the Executive may make any assignment of this Agreement or any interest herein, by operation of law or otherwise, without the prior written consent of the other party; provided, however, that the Bank may assign its rights and obligations under this Agreement without the consent of the Executive in the event the Bank shall hereafter effect a reorganization, consolidate with or merge into any other person or entity, or transfer all or substantially all of its properties or assets to any other entity or person. This Agreement shall inure to the benefit of and be binding upon the Bank and the Executive, their respective successors, executors, administrators, heirs and permitted assigns. In the event of the Executive's death prior to the completion by the Bank of all payments due to the Executive under this Agreement, the Bank shall continue such payments to the Executive's beneficiary designated in writing to the Bank prior to the Executive's death (or to the Executive's estate, if the Executive fails to make such designation). 13. Enforceability. If any portion or provision of this Agreement shall to any extent be declared illegal or unenforceable by a court of competent jurisdiction, then the remainder of this Agreement, or the application of such portion or provision in circumstances other than those as to which it is so declared illegal or unenforceable, shall not be affected thereby, and each portion and provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law. 14. Waiver. No waiver of any provision hereof shall be effective unless made in writing and signed by the waiving party. The failure of any party to require the performance of any term or obligation of this Agreement, or the waiver by any party of any breach of this Agreement, shall not prevent any subsequent enforcement of such term or obligation or be deemed a waiver of any subsequent breach. 15. Notices. Any notices, requests, demands and other communications provided for by this Agreement shall be sufficient if in writing and delivered in person or sent by registered or certified mail, postage prepaid, to the Executive at the last address the Executive has filed in writing with the Bank or, in the case of the Bank, at its main offices attention of the Secretary. 16. Entire Agreement. This Agreement is complete, reflects the entire agreement of the parties with respect to its subject matter, and supersedes all previous written or oral negotiations, commitments and writings. 6 17. Amendment. This Agreement may be amended or modified only by a written instrument signed by the Executive and by a duly authorized representative of the Bank. 18. Consent to Jurisdiction. To the extent that any court action is permitted consistent with or to enforce Section 11 of this Agreement, the parties hereby consent to the jurisdiction of any court of competent jurisdiction in Massachusetts and the United States District Court for the District of Massachusetts. Accordingly, with respect to any such court action, the Executive (a) submits to the personal jurisdiction of such courts; (b) consents to service of process; and (c) waives any other requirement (whether imposed by statute, rule of court, or otherwise) with respect to personal jurisdiction or service of process. 19. Governing Law. This is a Massachusetts contract and shall be construed under and be governed in all respects by the laws of the Commonwealth of Massachusetts, without giving effect to the conflict of laws principles of such State. With respect to any disputes concerning federal law, such disputes shall be determined in accordance with the law as it would be interpreted and applied by the United States Court of Appeals for the First Circuit. IN WITNESS WHEREOF, this Agreement has been executed as a sealed instrument by the Bank, by its duly authorized officer, and by the Executive as of the date first above written. CHART BANK, A COOPERATIVE BANK By: _____________________________ Title: EXECUTIVE _________________________________ Alfred J. Odoardi 7 EX-21 21 b52576bfexv21.txt EX-21 SUBSIDIARIES OF REGISTRANT . . . Exhibit 21 Subsidiaries of Benjamin Franklin Bancorp The following are the subsidiaries of Benjamin Franklin Bancorp:
NAME OF SUBSIDIARY JURISDICTION OF INCORPORATION - --------------------------------------- ----------------------------- Benjamin Franklin Bank Massachusetts Benjamin Franklin Bank Capital Trust I Delaware
The following is a wholly-owned subsidiary of Benjamin Franklin Bank:
NAME OF SUBSIDIARY JURISDICTION OF INCORPORATION - --------------------------------------- ----------------------------- Benjamin Franklin Bank Securities Corp. Massachusetts
EX-23.3 22 b52576bfexv23w3.txt EX-23.3 CONSENT OF WOLF & COMPANY, P.C. WITH RESPECT TO BENJAMIN FRANKLIN BANCORP EXHIBIT 23.3 INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM'S CONSENT We consent to the use in this Registration Statement on Form S-1 of our report dated February 27, 2004, except for Note 17 as to which the date is October 28, 2004, with respect to the consolidated financial statements of Benjamin Franklin Bancorp, Inc. as of and for the years ended December 31, 2003 and 2002, appearing in the Prospectus, which is part of this Registration Statement, and to the references to us under the headings "Selected Consolidated Financial Information of Benjamin Franklin Bancorp" and "Experts" in such Prospectus. WOLF & COMPANY, P.C. Boston, Massachusetts December 8, 2004 EX-23.4 23 b52576bfexv23w4.txt EX-23.4 CONSENT OF WOLF & COMPANY, P.C. WITH RESPECT TO CHART BANK EXHIBIT 23.4 INDEPENDENT AUDITORS' CONSENT We consent to the use in this Registration Statement relating to an offering of common stock of Benjamin Franklin Bancorp, Inc. on Form S-1 of our report dated February 20, 2004, except for Note 13 as to which the date is September 1, 2004, relating to the consolidated financial statements of Chart Bank, A Cooperative Bank as of and for the years ended December 31, 2003 and 2002, appearing in the Prospectus, which is part of this Registration Statement, and to the references to us under the headings "Selected Consolidated Financial Information of Chart Bank" and "Experts" in such Prospectus. WOLF & COMPANY, P.C. Boston, Massachusetts December 8, 2004 EX-23.5 24 b52576bfexv23w5.txt EX-23.5 CONSENT OF RP FINANCIAL, LC. EXHIBIT 23.5 RP(R) FINANCIAL, LC. Financial Services Industry Consultants December 10, 2004 Boards of Trustees Benjamin Franklin Bancorp, M.H.C. Benjamin Franklin Savings Bank 58 Main Street Franklin, Massachusetts 02038-0309 Members of the Boards: We hereby consent to the use of our firm's name in the Registration Statement on Form S-1 for Benjamin Franklin Bancorp, Inc. and any amendments thereto. We also hereby consent to the inclusion of, summary of and references to our Appraisal and our statement concerning subscription rights in such filings including the prospectus of Benjamin Franklin Bancorp, Inc. Sincerely, RP(R) FINANCIAL, LC. (RP Financial, LC.) - ----------------------- WASHINGTON HEADQUARTERS Rosslyn Center Telephone: (703) 528-1700 1700 North Moore Street, Suite 2210 Fax No.: (703) 528-1788 Arlington, VA 22209 Toll-Free No.: (866) 723-0594 www.rpfinancial.com E-Mail: mail@rpfinancial.com EX-99.1 25 b52576bfexv99w1.txt EX-99.1 APPRAISAL AGREEMENT BETWEEN BENJAMIN FRANKLIN BANCORP AND RP FINANCIAL, LC. RP(R) FINANCIAL, LC. Financial Services Industry Consultants EXHIBIT 99.1 September 10, 2004 Mr. Thomas R. Venables President and Chief Executive Officer Benjamin Franklin Savings Bank 58 Main Street Franklin, Massachusetts 02038 Dear Mr. Venables: This letter sets forth the agreement between Benjamin Franklin Savings Bank ("Benjamin Franklin" or the "Company"), subsidiary of Benjamin Franklin Bancorp, M.H.C., Franklin, Massachusetts (the "MHC"), and RP(R) Financial, LC. ("RP Financial") for independent conversion appraisal services pertaining to the mutual-to-stock conversion of the MHC and the simultaneous acquisition of Chart Bank. The specific appraisal services to be rendered by RP Financial are described below. These appraisal services will be rendered by a team of two senior consultants on staff and will be directed by the undersigned. DESCRIPTION OF APPRAISAL SERVICES In conjunction with preparing the appraisal report, RP Financial will conduct a financial due diligence, including on-site interviews of senior management, reviews of financial and other documents and records, and an analysis of the pro forma impact of the Chart Bank acquisition and the cash and stock contribution to a charitable foundation, to gain insight into the operations, financial condition, profitability, market area, risks and various internal and external factors of Benjamin Franklin, all of which will be considered in estimating the pro forma market value of the Company. RP Financial will prepare a detailed written valuation report of the Company that will be fully consistent with applicable federal regulatory guidelines and standard pro forma valuation practices. The appraisal report will include an analysis of the Company's financial condition and operating results, as well as an assessment of the Company's interest rate risk, credit risk and liquidity risk, incorporating the anticipated impact from the Chart Bank acquisition. The appraisal report will describe the Company's business strategies, market area, prospects for the future, impact of the Chart Bank transaction, the impact of the Foundation and the intended use of proceeds. A peer group analysis relative to comparable publicly-traded savings institutions will be conducted for the purpose of determining appropriate valuation adjustments for the Company relative to the peer group. WASHINGTON HEADQUARTERS Rosslyn Center Telephone: (703) 528-1700 1700 North Moore Street, Suite 2210 Fax No.: (703) 528-1788 Arlington, VA 22209 Toll-Free No.: (866) 723-0594 www.rpfinancial.com E-Mail: wpommerening@rpfinancial.com Mr. Thomas R. Venables September 10, 2004 Page 2 We will ascertain from the Company certain information pertaining to the structure of the conversion transaction, all which will be incorporated into the valuation, including the impact of key deal elements on the pro forma market value, such as dividend policy, use of proceeds and reinvestment rate, tax rate, offering expenses, characteristics of stock plans and contribution to the charitable foundation. We will also consider the pro forma impact of the Chart Bank acquisition, including the pro forma impact on equity and earnings. The appraisal report will establish a midpoint pro forma market value. The appraisal report may be periodically updated throughout the conversion process as appropriate. There will be at least one updated valuation that would be prepared at the time of the closing of the stock offering. RP Financial agrees to deliver the original appraisal report and subsequent updates, in writing, to the Company at the above address in conjunction with the filing of the regulatory applications. Subsequent updates will be filed promptly as certain events occur which would warrant the preparation and filing of such valuation updates. Further, RP Financial agrees to perform such other services as are necessary or required in connection with the regulatory review of the appraisal and respond to the regulatory comments, if any, regarding the valuation appraisal and subsequent updates. RP Financial expects to formally present the original appraisal report, including the appraisal methodology, peer group selection and assumptions, to the Board of Directors for review and acceptance. FEE STRUCTURE AND PAYMENT SCHEDULE The Company agrees to pay RP Financial a fixed fee of $75,000 for preparation of the original appraisal and $5,000 per updated appraisal, plus reimbursable expenses. Payment of these fees shall be made according to the following schedule: - $10,000 upon execution of the letter of agreement engaging RP Financial's appraisal services; - $65,000 upon delivery of the original appraisal report concurrent with filing the regulatory applications; and - $5,000 upon delivery of each updated appraisal (there will be at least one updated appraisal prepared concurrent with the end of the offering). The Company will reimburse RP Financial for reasonable out-of-pocket expenses incurred in preparation of the valuation. Such out-of-pocket expenses will likely include travel, printing, telephone, facsimile, shipping, computer and data services. RP Financial will agree to limit reimbursable expenses in conjunction with the appraisal and business planning engagements, subject to written authorization from the Company to exceed such level. Mr. Thomas R. Venables September 10, 2004 Page 3 In the event the Company shall, for any reason, discontinue the proposed transaction prior to delivery of the completed documents set forth above and payment of the respective progress payment fees, the Company agrees to compensate RP Financial according to RP Financial's standard billing rates for consulting services based on accumulated and verifiable time expenses, not to exceed the respective fee caps noted above, after applying full credit to the initial $10,000 retainer fee towards such payment. RP Financial's standard billing rates range from $75 per hour for research associates to $300 per hour for managing directors. If during the course of the proposed transaction, unforeseen events occur so as to materially change the nature or the work content of the services described in this contract, the terms of said contract shall be subject to renegotiation by the Company and RP Financial. Such unforeseen events shall include, but not be limited to, major changes in the conversion regulations, appraisal guidelines or processing procedures as they relate to conversion appraisals, major changes in management or procedures, operating policies or philosophies, and excessive delays or suspension of processing of conversion applications by the regulators such that completion of the conversion transaction requires the preparation by RP Financial of a new appraisal. REPRESENTATIONS AND WARRANTIES The Company and RP Financial agree to the following: 1. The Company agrees to make available or to supply to RP Financial such information with respect to its business and financial condition as RP Financial may reasonably request in order to provide the aforesaid valuation. Such information heretofore or hereafter supplied or made available to RP Financial shall include: annual financial statements, periodic regulatory filings and material agreements, debt instruments, off balance sheet assets or liabilities, commitments and contingencies, unrealized gains or losses and corporate books and records. All information provided by the Company to RP Financial shall remain strictly confidential (unless such information is otherwise made available to the public), and if the conversion is not consummated or the services of RP Financial are terminated hereunder, RP Financial shall upon request promptly return to the Company the original and any copies of such information. 2. The Company hereby represents and warrants to RP Financial that any information provided to RP Financial does not and will not, to the best of the Company's knowledge, at the times it is provided to RP Financial, contain any untrue statement of a material fact or in response to informational requests by RP Financial fail to state a material fact necessary to make the statements therein not false or misleading in light of the circumstances under which they were made. 3. (a) The Company agrees that it will indemnify and hold harmless RP Financial, any affiliates of RP Financial, the respective directors, officers, agents and employees of RP Financial or their successors and assigns who act for or on behalf of RP Financial in connection with the services called for under this agreement (hereinafter referred to as "RP Financial"), from and Mr. Thomas R. Venables September 10, 2004 Page 4 against any and all losses, claims, damages and liabilities (including, but not limited to, reasonable attorneys fees, all losses and expenses in connection with claims under the federal securities laws) attributable to (i) any untrue statement or alleged untrue statement of a material fact contained in the financial statements or other information furnished or otherwise provided by the Company to RP Financial, either orally or in writing; (ii) the omission or alleged omission of a material fact from the financial statements or other information furnished or otherwise made available by the Company to RP Financial; or (iii) any action or omission to act by the Company, or the Company's respective officers, directors, employees or agents, which action or omission is undertaken in bad faith or is negligent. The Company will be under no obligation to indemnify RP Financial hereunder if a court determines that RP Financial was negligent or acted in bad faith with respect to any actions or omissions of RP Financial related to a matter for which indemnification is sought hereunder. Reasonable time devoted by RP Financial to situations for which indemnification is provided hereunder, shall be an indemnifiable cost payable by the Company at the normal hourly professional rate chargeable by such employee. (b) RP Financial shall give written notice to the Company of such claim or facts within thirty days of the assertion of any claim or discovery of material facts upon which the RP Financial intends to base a claim for indemnification hereunder, including the name of counsel that RP Financial intends to engage in connection with any indemnification related matter. In the event the Company elects, within seven days of the receipt of the original notice thereof, to contest such claim by written notice to RP Financial, the Company shall not be obligated to make payments under Section 3(c), but RP Financial will be entitled to be paid any amounts payable by the Company hereunder, together with interest on such costs from the date incurred at the annual rate of prime plus two percent within five days after the final determination of such contest either by written acknowledgement of the Company or a final judgment of a court of competent jurisdiction, unless it is determined in accordance with Section 3(c) hereof that RP Financial is not entitled to indemnity hereunder. If the Company does not so elect to contest a claim for indemnification by RP Financial hereunder, RP Financial shall (subject to the Company's receipt of the written statement and undertaking under Section 3(c) hereof) be paid promptly and in any event within thirty days after receipt by the Company of billing statements or invoices for which RP Financial is entitled to reimbursement under Section 3(c) hereof. (c) Subject to the Company's right to contest under Section 3(b) hereof, the Company shall pay for or reimburse the reasonable expenses, including attorneys' fees, incurred by RP Financial in advance of the final disposition of any proceeding within thirty days of the receipt of such request if RP Financial furnishes the Company: (1) a written statement of RP Financial's good faith belief that it is entitled to indemnification hereunder; and (2) a written undertaking to repay the advance if it ultimately is determined in a final adjudication of such proceeding that it or he is not entitled to such indemnification. (d) In the event the Company does not pay any indemnified loss or make advance reimbursements of expenses in accordance with the terms of this agreement, RP Financial shall have all remedies available at law or in equity to enforce such obligation. Mr. Thomas R. Venables September 10, 2004 Page 5 This agreement constitutes the entire understanding of the Company and RP Financial concerning the subject matter addressed herein, and such contract shall be governed and construed in accordance with the laws of the Commonwealth of Virginia. This agreement may not be modified, supplemented or amended except by written agreement executed by both parties. Benjamin Franklin and RP Financial are not affiliated, and neither Benjamin Franklin nor RP Financial has an economic interest in, or is held in common with, the other and has not derived a significant portion of its gross revenues, receipts or net income for any period from transactions with the other. * * * * * * * * * * * Please acknowledge your agreement to the foregoing by signing as indicated below and returning to RP Financial a signed copy of this letter, together with the initial retainer fee of $10,000. Sincerely, William E. Pommerening Chief Executive Officer and Managing Director Agreed To and Accepted By: Thomas R. Venables ______________________ President and Chief Executive Officer Upon Authorization by the Board of Directors For: Benjamin Franklin Savings Bank, subsidiary of Benjamin Franklin Bancorp, M.H.C. Franklin, Massachusetts Date Executed: ___________________________________ EX-99.3 26 b52576bfexv99w3.txt EX-99.3 BUSINESS PLAN AGREEMENT BETWEEN BENJAMIN FRANKLIN BANCORP AND RP FINANCIAL, LC. RP(R) FINANCIAL, LC. Financial Services Industry Consultants EXHIBIT 99.3 September 10, 2004 Mr. Thomas R. Venables President and Chief Executive Officer Benjamin Franklin Savings Bank 58 Main Street Franklin, Massachusetts 02038 Dear Mr. Venables: This letter sets forth the agreement between Benjamin Franklin Savings Bank, Franklin, Massachusetts ("Benjamin Franklin"), subsidiary of Benjamin Franklin Bancorp, M.H.C., and RP(R) Financial, LC. ("RP Financial"), whereby Benjamin Franklin has engaged RP Financial to prepare the written business plan document and financial projections reflecting the pro forma impact of the mutual to stock conversion of Benjamin Franklin, the simultaneous cash and stock acquisition of Chart Bank, Waltham, Massachusetts, and the post-conversion and merger activities of Benjamin Franklin. These services are described in greater detail below. DESCRIPTION OF PROPOSED SERVICES RP Financial's business planning services will include the following areas: (1) determining Benjamin Franklin's current financial and operating condition, business strategies and anticipated future strategies, both currently and on a pro forma basis; (2) quantifying the impact of business strategies, incorporating the use of offering proceeds and the acquisition of Benjamin Franklin; (3) preparing detailed financial projections on a quarterly basis for a period of at least three fiscal years to reflect the impact of selected business strategies and the use of offering proceeds; (4) preparing the written business plan document which conforms with applicable regulatory guidelines, including a description of the use of offering proceeds and how the convenience and needs of the community will be addressed; and (5) preparing the detailed schedules of the capitalization and inter-company cash flows. The contents of the business plan will include: Executive Summary; Description of Business; Marketing Plan; Management Plan; Records, Systems and Controls; Financial Management Plan; Monitoring and Revising the Plan; and Alternative Business Strategy RP Financial agrees to prepare the business plan and accompanying financial projections in writing such that the business plan conforming to regulatory guidelines can be filed with the appropriate federal and state regulatory agencies in conjunction with the filing of the stock offering application. WASHINGTON HEADQUARTERS Rosslyn Center Telephone: (703) 528-1700 1700 North Moore Street, Suite 2210 Fax No.: (703) 528-1788 Arlington, VA 22209 Toll-Free No.: (866) 723-0594 www.rpfinancial.com E-Mail: wpommerening@rpfinancial.com Mr. Thomas R. Venables September 10, 2004 Page 2 FEE STRUCTURE AND PAYMENT SCHEDULE Benjamin Franklin agrees to compensate RP Financial for preparation of the business plan on a fixed fee basis of $15,000. Payment of the professional fees shall be made upon delivery of the completed business plan. Benjamin Franklin also agrees to reimburse RP Financial for those direct reasonable out-of-pocket expenses necessary and incidental to providing the business planning services. Reimbursable expenses will likely include shipping, telephone/facsimile printing, computer and data services, and shall be paid to RP Financial as incurred and billed. RP Financial will agree to limit reimbursable expenses in conjunction with the business planning and appraisal engagements, subject to written authorization from Benjamin Franklin to exceed such level. In the event Benjamin Franklin shall, for any reason, discontinue this planning engagement prior to delivery of the completed business plan and payment of the progress payment fee, Benjamin Franklin agrees to compensate RP Financial according to RP Financial's standard billing rates for consulting services based on accumulated and verifiable time expenses, not to exceed the fixed fee described above, plus reimbursable expenses incurred. If during the course of the planning engagement, unforeseen events occur so as to materially change the nature or the work content of the business planning services described in this contract, the terms of said contract shall be subject to renegotiation by Benjamin Franklin and RP Financial. Such unforeseen events may include changes in regulatory requirements as it specifically relates to Benjamin Franklin. INDEMNIFICATIONS The provisions of paragraph 3 in that certain letter agreement dated September 10, 2004 between Benjamin Franklin and RP Financial are incorporated herein by reference. Please acknowledge your agreement to the foregoing by signing as indicated below and returning to RP Financial a signed copy of this letter. Sincerely, William E. Pommerening CEO and Managing Director Agreed To and Accepted By: Thomas R. Venables ___________________________ President and Chief Executive Officer Upon Authorization by the Board of Directors For: Benjamin Franklin Savings Bank Subsidiary of Benjamin Franklin Bancorp, M.H.C. Franklin, Massachusetts Date Executed: ___________________________________ EX-99.8 27 b52576bfexv99w8.txt EX-99.8 CONSENTS OF RICHARD E. BOLTON, JR., PAUL E. CAPASSO, JONATHAN A. HAYNES, DANIEL F. O'BRIEN, DONALD P. QUINN, AND NEIL E. TODREAS, TO BE IDENTIFIED AS PROPOSED DIRECTORS EXHIBIT 99.8 CONSENT TO BE NAMED AS A PERSON ABOUT TO BECOME A DIRECTOR The undersigned hereby consents to be named in the Registration Statement on Form S-1 to which this Consent has been filed as an exhibit, or any amendment thereto, as a person who shall become a Director of Benjamin Franklin Bancorp, Inc. upon the completion of the acquisition of Chart Bank, A Cooperative Bank, by Benjamin Franklin Bancorp, Inc. /s/ Richard E. Bolton ------------------------------ Name: Richard E. Bolton Date: December 10, 2004 CONSENT TO BE NAMED AS A PERSON ABOUT TO BECOME A DIRECTOR The undersigned hereby consents to be named in the Registration Statement on Form S-1 to which this Consent has been filed as an exhibit, or any amendment thereto, as a person who shall become a Director of Benjamin Franklin Bancorp, Inc. upon the completion of the acquisition of Chart Bank, A Cooperative Bank, by Benjamin Franklin Bancorp, Inc. /s/ Paul E. Capasso ------------------------------ Name: Paul E. Capasso Date: December 10, 2004 - 2 - CONSENT TO BE NAMED AS A PERSON ABOUT TO BECOME A DIRECTOR The undersigned hereby consents to be named in the Registration Statement on Form S-1 to which this Consent has been filed as an exhibit, or any amendment thereto, as a person who shall become a Director of Benjamin Franklin Bancorp, Inc. upon the completion of the acquisition of Chart Bank, A Cooperative Bank, by Benjamin Franklin Bancorp, Inc. /s/ Jonathan A. Haynes ------------------------------ Name: Jonathan A. Haynes Date: December 10, 2004 - 3 - CONSENT TO BE NAMED AS A PERSON ABOUT TO BECOME A DIRECTOR The undersigned hereby consents to be named in the Registration Statement on Form S-1 to which this Consent has been filed as an exhibit, or any amendment thereto, as a person who shall become a Director of Benjamin Franklin Bancorp, Inc. upon the completion of the acquisition of Chart Bank, A Cooperative Bank, by Benjamin Franklin Bancorp, Inc. /s/ Daniel F. O'Brien ------------------------------ Name: Daniel F. O'Brien Date: December 10, 2004 - 4 - CONSENT TO BE NAMED AS A PERSON ABOUT TO BECOME A DIRECTOR The undersigned hereby consents to be named in the Registration Statement on Form S-1 to which this Consent has been filed as an exhibit, or any amendment thereto, as a person who shall become a Director of Benjamin Franklin Bancorp, Inc. upon the completion of the acquisition of Chart Bank, A Cooperative Bank, by Benjamin Franklin Bancorp, Inc. /s/ Donald P. Quinn ------------------------------ Name: Donald P. Quinn Date: December 10, 2004 - 5 - CONSENT TO BE NAMED AS A PERSON ABOUT TO BECOME A DIRECTOR The undersigned hereby consents to be named in the Registration Statement on Form S-1 to which this Consent has been filed as an exhibit, or any amendment thereto, as a person who shall become a Director of Benjamin Franklin Bancorp, Inc. upon the completion of the acquisition of Chart Bank, A Cooperative Bank, by Benjamin Franklin Bancorp, Inc. /s/ Neil E. Todreas ------------------------------ Name: Neil E. 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MA$CI">B<5W24%F4Z@8_%W6UH+!5*'89(M*'$=D@E)6$(-!DD M6=OU;AK+<*Q*%X0\V[VU.!L112VG)R.=_]TU=$W-2@+GJL9[G&6U@#1J!)UW MP(XTFZ+I;G=YMOVBVY3;2UZ.=R!M\X.8AB?=]1KFN/$#G>A4*U\A M@C2[9"!N5//+7OI^\+HEU-QN`4R],E9(3'S]+X)E*^`7J@U_;!#O@ZF"R!N: MSA3QN/#9RBM(G%$8C\'UL&S-XYQ?JBE;*1UF34RL+!!K-&'Z:(R,81R9##A' M=.&5JKRD!!/);8,Q_CCPI-[HK`,+,<(6!HZ+`;E`'"-G%6*1TWTF(\RDZD8^ M18E5L5K#+U@JH_]E0R#FXLQ!R9_8@"1%L4:!<\QD@NV7!$^4,G[^L+(5.RK+ M6M%<+MJU(GI9)%U`'$G)H(9,?:VKF&.5%'4D@K5P481J2L6/=>\TX@UTSL[) M^8-_@I%I3">?O4GUH.Y)@UFQ^BP@6-5M9":N)=^XOF&H M+,U0J60LJIF0K*Q>>T%3 ML>>[ZP&/3B9K<96;[-&OZ:RZH:O&R9N?$VYC,RS>#`2(1-GX%>$ZMUL$M' M$J=6A9*-/-CI346U33F862%X>'E@O)L\N=BEVBP@9L1OB@S8%SA&U7'BZP=WQ]J4'(%HZSBIR-2"T M$R^)TGIFJAF-O.:3(SKZ,=@?KU8>12Z!RC*SZ=O@^;B)$)[MF).M&(JF#[XY MEJ]@"N)4#VF:+D5V3E]:"WL\M,46:G%%IP=K>XQ8#RM=]F-'%]1Y5\':M72% M7X`CH4E`E:T\V>:F//T3.N_[0)"-1,?[W>IR(N79HBSY5$"^QYE'%.759/D4 MU+GSKMA\O4DOF<^KB<>:_C;J3=A1DK[>`W_/TJ<5.>S9.S7VTN6S[W\/_.`+ M?_C$+[[QCX]\)E=G^QOO_NC+^?WRW_^]/^*^>N/__SK?__\G[[NERIU?R6` M`TB`!6B`!XB`":B`"\B`#>B`#PB!$2B!$ZB`_V>!%XB!&:B!&\B!'>B!'PB" 3(2B"(TB")6B")XB"*;B!"0``.S\_ ` end CORRESP 30 filename30.txt [FOLEY HOAG LLP LETTERHEAD] Carol Hempfling Pratt Boston Office 617-832-1148 December 10, 2004 cpratt@foleyhoag.com BY EDGAR Securities and Exchange Commission Division of Corporation Finance 450 5th Street, N.W. Washington, D.C. 20549 Re: Benjamin Franklin Bancorp Registration Statement on Form S-1 Ladies and Gentlemen: On behalf of Benjamin Franklin Bancorp, Inc., Franklin, Massachusetts (the "Registrant"), following this letter is a direct transmission (modem) filing of Registration Statement on Form S-1 (the "Registration Statement"). This filing is made pursuant to The Securities Act of 1933, as amended. The enclosed Registration Statement relates to the shares of Common Stock of the Registrant to be offered in connection with the proposed conversion of the Registrant from a mutual bank holding company (known as Benjamin Franklin Bancorp, M.H.C.) to a Massachusetts-chartered business corporation in stock form (to be known as Benjamin Franklin Bancorp, Inc.). The conversion is being conducted under applicable Massachusetts and federal banking law. The Registration Statement also relates to up to 400,000 shares of common stock that the Registrant intends to contribute to a newly created charitable foundation, to be known as the Benjamin Franklin Bank Charitable Foundation, immediately following completion of the offering. The Registrant decided to undertake the mutual-to-stock conversion in connection with its decision to enter into an agreement to acquire Chart Bank, A Cooperative Bank, located in Waltham, Massachusetts. Chart Bank is a privately held Massachusetts-chartered cooperative bank. In the acquisition, 55% of the consideration will be paid in newly issued shares of Benjamin Franklin Bancorp common stock and 45% of the consideration will be paid in cash. The Registrant intends to file a Registration Statement on Form S-4 as promptly as practicable to register the shares of common stock to be issued to the Chart Bank stockholders in the acquisition. Much of the Form S-4 will be identical to the enclosed Registration Statement on Form S-1. Securities and Exchange Commission Division of Corporation Finance December 10, 2004 Page 2 A wire transfer in the amount of $8,554.84 has been sent to the Registrant's lock box in payment of the filing fee. If you have any questions or require any further information with respect to the Registration Statement or any matters relating to this filing, please telephone the undersigned at (617) 832-1000. If I am not available, Peter Coogan or Janene Asgeirsson of this office should be in a position to assist you. Thank you very much for your assistance. Very truly yours, /s/ Carol Hempfling Pratt Carol Hempfling Pratt CHP cc: Todd K. Schiffman Thomas R. Venables Claire S. Bean Robin P. Suskind Marc P. Levy, Esq. Daniel Adams, Esq. -----END PRIVACY-ENHANCED MESSAGE-----