Exhibit 10.1

 

SUBORDINATED NOTE PURCHASE AGREEMENT

 

This SUBORDINATED NOTE PURCHASE AGREEMENT (this “Agreement”) is dated as of
December 17, 2015, and is made by and among Wellesley Bancorp, Inc., a Maryland
corporation (“Company”), and the several purchasers of the Subordinated Notes
identified on the signature pages hereto (each a “Purchaser” and collectively,
the “Purchasers”).

 

RECITALS

 

WHEREAS, Company has requested that the Purchasers purchase from Company up to
$10,000,000 in aggregate principal amount of Subordinated Notes (as defined
herein), which aggregate amount is intended to qualify as Tier 2 Capital (as
defined herein).

 

WHEREAS, Company has engaged Sandler O’Neill + Partners, L.P., as its exclusive
placement agent (“Placement Agent”) for the offering of the Subordinated Notes.

 

WHEREAS, each of the Purchasers is an institutional accredited investor as such
term is defined in Rule 501 of Regulation D (“Regulation D”) promulgated under
the Securities Act of 1933, as amended (the “Securities Act”).

 

WHEREAS, the offer and sale of the Subordinated Notes by Company is being made
only to Qualified Institutional Buyers as defined in Rule 144A under the
Securities Act and institutional Accredited Investors as defined in Rules
501(a)(1), (2), (3) or (7) under the Securities Act, in reliance upon the
exemption under Section 4(a)(2) of the Securities Act and the provisions of Rule
506(b) of Regulation D promulgated thereunder.

 

WHEREAS, each Purchaser is willing to purchase from Company a Subordinated Note
in the principal amount set forth on such Purchaser’s respective signature page
hereto (the “Subordinated Note Amount”) in accordance with the terms of, subject
to the conditions in and in reliance on, the recitals, representations,
warranties, covenants and agreements set forth herein and in the Subordinated
Notes.

 

NOW, THEREFORE, in consideration of the mutual covenants, conditions and
agreements herein contained and other good and valuable consideration, the
receipt of which is hereby acknowledged, the parties hereto hereby agree as
follows:

 

AGREEMENT

 

I.           DEFINITIONS.

 

A.           Defined Terms. The following capitalized terms generally used in
this Agreement and in the Subordinated Notes have the meanings defined or
referenced below. Certain other capitalized terms used only in specific sections
of this Agreement may be defined in such sections.

 

 

 

 

“Affiliate(s)” means, with respect to any Person, such Person’s immediate family
members, partners, members or parent and subsidiary corporations, and any other
Person directly or indirectly controlling, controlled by, or under common
control with said Person and their respective Affiliates.

 

“Agreement” has the meaning set forth in the preamble hereto.

 

“Bank” means Wellesley Bank, a Massachusetts cooperative bank and wholly owned
subsidiary of Company.

 

“Business Day” means any day other than a Saturday, Sunday or any other day on
which banking institutions in the Commonwealth of Massachusetts are permitted or
required by any applicable law or executive order to close.

 

“Closing” has the meaning set forth in Section II.E.

 

“Closing Date” means December 17, 2015.

 

“Company” has the meaning set forth in the preamble hereto and shall include any
successors to Company.

 

“Company’s Liabilities” means Company’s obligations under the Transaction
Documents.

 

“Company’s SEC Reports” means (i) Company’s Annual Report on Form 10-K for the
fiscal year ended December 31, 2014, as filed with the SEC, (ii) Company’s
Definitive Proxy Statement on Schedule 14A related to its 2015 Annual Meeting of
Shareholders, as filed with the SEC, (iii) any Current Report on Form 8-K, as
filed or furnished by Company with the SEC since January 1, 2015, or (iv)
Company’s Quarterly Reports on Form 10-Q for the quarterly periods ended on
March 31, 2015, June 30, 2015, and September 30, 2015, as filed with the SEC
pursuant to the requirements of the Exchange Act.

 

“Disbursement” has the meaning set forth in Section III.A.

 

“Equity Interest” means any and all shares, interests, participations or other
equivalents (however designated) of capital stock of a corporation, any and all
equivalent ownership interests in a Person which is not a corporation, and any
and all warrants, options or other rights to purchase any of the foregoing.

 

“Exchange Act” has the meaning set forth in Section IV.H.

 

“FDIC” means the Federal Deposit Insurance Corporation.

 

“GAAP” means generally accepted accounting principles in effect from time to
time in the United States of America.

 

“Governmental Agency(ies)” means, individually or collectively, any federal,
state, county or local governmental department, commission, board, regulatory
authority or agency (including, without limitation, each applicable Regulatory
Agency) with jurisdiction over Company.

 

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“Governmental Licenses” has the meaning set forth in Section IV.C.

 

“Hazardous Materials” means flammable explosives, asbestos, urea formaldehyde
insulation, polychlorinated biphenyls, radioactive materials, hazardous wastes,
toxic or contaminated substances or similar materials, including, without
limitation, any substances which are “hazardous substances,” “hazardous wastes,”
“hazardous materials” or “toxic substances” under the Hazardous Materials Laws
and/or other applicable environmental laws, ordinances or regulations.

 

“Hazardous Materials Laws” mean any laws, regulations, permits, licenses or
requirements pertaining to the protection, preservation, conservation or
regulation of the environment which relates to real property, including: the
Clean Air Act, as amended, 42 U.S.C. Section 7401 et seq.; the Federal Water
Pollution Control Act, as amended, 33 U.S.C. Section 1251 et seq.; the Resource
Conservation and Recovery Act of 1976, as amended, 42 U.S.C. Section 6901 et
seq.; the Comprehensive Environmental Response, Compensation and Liability Act
of 1980, as amended (including the Superfund Amendments and Reauthorization Act
of 1986), 42 U.S.C. Section 9601 et seq.; the Toxic Substances Control Act, as
amended, 15 U.S.C. Section 2601 et seq.; the Occupational Safety and Health Act,
as amended, 29 U.S.C. Section 651, the Emergency Planning and Community
Right-to-Know Act of 1986, 42 U.S.C. Section 11001 et seq.; the Mine Safety and
Health Act of 1977, as amended, 30 U.S.C. Section 801 et seq.; the Safe Drinking
Water Act, 42 U.S.C. Section 300f et seq.; and all comparable state and local
laws, laws of other jurisdictions or orders and regulations.

 

“Indebtedness” means and includes: (i) all items arising from the borrowing of
money that, according to GAAP as in effect from time to time, would be included
in determining total liabilities as shown on the consolidated balance sheet of
Company or any Subsidiary of Company; and (ii) all obligations secured by any
lien in property owned by Company or any Subsidiary whether or not such
obligations shall have been assumed; provided, however, Indebtedness shall not
include deposits or other indebtedness created, incurred or maintained in the
ordinary course of Company’s or Bank’s business (including, without limitation,
federal funds purchased, advances from any Federal Home Loan Bank, secured
deposits of municipalities, letters of credit issued by Company or Bank and
repurchase arrangements) and consistent with customary banking practices and
applicable laws and regulations.

 

“Leases” means all leases, licenses or other documents providing for the use or
occupancy of any portion of any Property, including all amendments, extensions,
renewals, supplements, modifications, sublets and assignments thereof and all
separate letters or separate agreements relating thereto.

 

“Material Adverse Effect” means, 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, or
(ii) would materially impair the ability of any Person to perform its respective
obligations under any of the Transaction Documents, or otherwise materially
impede the consummation of the transactions contemplated hereby; provided,
however, that “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 Agencies, (2)
changes in GAAP or regulatory accounting requirements applicable to financial
institutions and their holding companies generally, (3) changes after the date
of this Agreement in general economic or capital market conditions affecting
financial institutions or their market prices generally and not specifically
related to Company or Purchasers, (4) direct effects of compliance with this
Agreement on the operating performance of Company or Purchasers, including
expenses incurred by Company or Purchasers in consummating the transactions
contemplated by this Agreement, and (5) the effects of any action or omission
taken by Company with the prior written consent of Purchasers, and vice versa,
or as otherwise contemplated by this Agreement and the Subordinated Notes.

 

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“Material Contract” shall mean any contract, agreement, indenture, mortgage,
deed of trust, pledge, bank loan or credit agreement, or any other agreement or
instrument to which Company or Bank, as applicable, is a party or by which it or
any of its properties may be bound or affected that has been filed by Company as
an exhibit to an SEC Report pursuant to Item 601(b)(4) or 601(b)(10) of
Regulation S-K.

 

“Maturity Date” means December 30, 2025.

 

“Person” means an individual, a corporation (whether or not for profit), a
partnership, a limited liability company, a joint venture, an association, a
trust, an unincorporated organization, a government or any department or agency
thereof (including a Governmental Agency) or any other entity or organization.

 

“Placement Agent” means Sandler O’Neill + Partners, L.P.

 

“Property” means any real property owned or leased by Company or any Affiliate
or Subsidiary of Company.

 

“Purchaser” or “Purchasers” has the meaning set forth in the preamble hereto.

 

“Regulation D” has the meaning set forth in the Recitals.

 

“Regulatory Agencies” means any federal or state agency charged with the
supervision or regulation of depositary institutions or holding companies of
depositary institutions, or engaged in the insurance of depositary institution
deposits, or any court, administrative agency or commission or other authority,
body or agency having supervisory or regulatory authority with respect to
Company, Bank or any of their Subsidiaries.

 

“SEC” means the Securities and Exchange Commission.

 

“Secondary Market Transaction” has the meaning set forth in Section V.E.

 

“Securities Act” has the meaning set forth in the Recitals.

 

“Subordinated Note” means the 6.0% Fixed to Floating Rate Subordinated Note due
December 30, 2025 (or collectively, the “Subordinated Notes”) in the form
attached as Exhibit A hereto, as amended, restated, supplemented or modified
from time to time, and each Subordinated Note delivered in substitution or
exchange for such Subordinated Note.

 

“Subordinated Note Amount” has the meaning set forth in the Recitals.

 

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“Subsidiary” means with respect to any Person, any corporation or entity in
which a majority of the outstanding Equity Interest is directly or indirectly
owned by such Person.

 

“Tier 2 Capital” has the meaning given to the term “Tier 2 capital” in 12 C.F.R.
Part 217, as amended, modified and supplemented and in effect from time to time
or any replacement thereof.

 

“Transaction Documents” has the meaning set forth in Section III.B.1.a.

 

B.           Interpretations. The foregoing definitions are equally applicable
to both the singular and plural forms of the terms defined. The words “hereof”,
“herein” and “hereunder” and words of like import when used in this Agreement
shall refer to this Agreement as a whole and not to any particular provision of
this Agreement. The word “including” when used in this Agreement without the
phrase “without limitation,” shall mean “including, without limitation.” All
references to time of day herein are references to Eastern Time unless otherwise
specifically provided. All references to the Agreement and Subordinated Notes
shall be deemed to be to such documents as amended, modified or restated from
time to time. With respect to any reference in this Agreement to any defined
term, (i) if such defined term refers to a Person, then it shall also mean all
heirs, legal representatives and permitted successors and assigns of such
Person, and (ii) if such defined term refers to a document, instrument or
agreement, then it shall also include any replacement, extension or other
modification thereof.

 

C.           Exhibits Incorporated. All Exhibits attached are hereby
incorporated into this Agreement.

 

II.          SUBORDINATED DEBT.

 

A.           Certain Terms. Subject to the terms and conditions herein
contained, Company proposes to issue and sell to the Purchasers, severally and
not jointly, Subordinated Notes, in an amount equal to the aggregate of the
Subordinated Note Amounts. The Purchasers, severally and not jointly, each agree
to purchase the Subordinated Notes, from Company on the Closing Date in
accordance with the terms of, and subject to the conditions and provisions set
forth in, this Agreement and the Subordinated Notes. The Subordinated Note
Amounts shall be disbursed in accordance with Section III.A. The Subordinated
Notes shall bear interest per annum as set forth in the Subordinated Notes.

 

B.           Subordination. The Subordinated Notes shall be subordinated in
accordance with the subordination provisions set forth therein.

 

C.           Maturity Date. On the Maturity Date, all sums due and owing under
this Agreement and the Subordinated Notes shall be repaid in full. Company
acknowledges and agrees that the Purchasers have not made any commitments,
either express or implied, to extend the terms of the Subordinated Notes past
their Maturity Date, and shall not extend such terms beyond the Maturity Date
unless Company and the Purchasers hereafter specifically otherwise agree in
writing.

 

D.           Unsecured Obligations. The obligations of Company to the Purchasers
under the Subordinated Notes shall be unsecured.

 

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E.           The Closing. The execution and delivery of the Transaction
Documents (the “Closing”) shall occur at the offices of Company at 10:00 a.m.
(local time) on the Closing Date, or at such other place or time or on such
other date as the parties hereto may agree.

 

F.           Payments. Company agrees that matters concerning payments and
application of payments shall be as set forth in this Agreement and in the
Subordinated Notes.

 

G.           Right of Offset. Each Purchaser hereby expressly waives any right
of offset it may have against Company.

 

H.           Use of Proceeds. Company shall use the net proceeds from the sale
of Subordinated Notes for general corporate purposes, including for the
provision of additional liquidity and working capital.

 

III.        DISBURSEMENT.

 

A.           Disbursement. On the Closing Date, assuming all of the terms and
conditions set forth in Section III.B have been satisfied by Company and Company
has executed and delivered to Purchasers each of the Agreement and the
Subordinated Notes and any other related documents in form and substance
reasonably satisfactory to Purchasers, each Purchaser shall disburse in
immediately available funds the Subordinated Note Amount set forth on such
Purchaser’s signature page hereto to Company in exchange for a Subordinated Note
with a principal amount equal to such Subordinated Note Amount (the
“Disbursement”). Company will deliver to the respective Purchaser one or more
certificates representing the Subordinated Notes in definitive form (or provide
evidence of the same with the original to be delivered by Company by overnight
delivery on the next calendar day in accordance with the delivery instructions
of Purchaser), registered in such names and denominations as such Purchasers may
request.

 

B.           Conditions Precedent to Disbursement.

 

1.           Conditions to Purchasers’ Obligation. The obligation of each
Purchaser to consummate the purchase of the Subordinated Notes to be purchased
by them at Closing and to effect the Disbursement is subject to delivery by or
at the direction of Company to such Purchaser each of the following (or written
waiver by such Purchaser prior to the Closing of such delivery):

 

a)           Transaction Documents. This Agreement and the Subordinated Notes
(collectively, the “Transaction Documents”), each duly authorized and executed
by Company.

 

b)           Authority Documents.

 

(1)A copy, certified by the Secretary or Assistant Secretary of Company, of the
Articles of Incorporation, of Company;

 

(2)A certificate of existence of Company issued by the Secretary of State of the
State of Maryland;

 

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(3)A copy, certified by the Secretary or Assistant Secretary, of the Bylaws of
Company;

 

(4)A copy, certified by the Secretary or Assistant Secretary of Company, of the
resolutions of the board of directors (and any committee thereof) of Company
authorizing the execution, delivery and performance of the Transaction
Documents;

 

(5)An incumbency certificate of the Secretary or Assistant Secretary of Company
certifying the names of the officer or officers of Company authorized to sign
the Transaction Documents and the other documents provided for in this
Agreement; and

 

(6)The opinion of Kilpatrick Townsend & Stockton LLP, counsel to the Company,
dated as of the Closing Date, substantially in the form set forth at Exhibit B
attached hereto addressed to the Purchasers and Placement Agent.

 

c)           Other Documents. Such other certificates, affidavits, schedules,
resolutions, notes and/or other documents which are provided for hereunder or as
a Purchaser may reasonably request.

 

d)           Aggregate Investments. Prior to, or contemporaneously with the
Closing, each Purchaser shall have actually subscribed for the Subordinated Note
Amount set forth on such Purchaser’s signature page.

 

2.           Conditions to Company’s Obligation.

 

a)Since the date of this Agreement, there shall not have been any action taken,
or any law, rule or regulation enacted, entered, enforced or deemed applicable
to Company or its Subsidiaries or the transactions contemplated by this
Agreement by any Governmental Agency which imposes any restriction or condition
that Company determines, in its reasonable good faith judgment, is materially
and unreasonably burdensome on Company’s business or would materially reduce the
economic benefits of the transactions contemplated by this Agreement to Company
to such a degree that Company would not have entered into this Agreement had
such condition or restriction been known to it on the date hereof.

 

b)With respect to a given Purchaser, the obligation of Company to consummate the
sale of the Subordinated Notes and to effect the Closing is subject to delivery
by or at the direction of such Purchaser to Company this Agreement, duly
authorized and executed by such Purchaser.

 

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IV.        REPRESENTATIONS AND WARRANTIES OF COMPANY.

 

Company hereby represents and warrants to each Purchaser as follows:

 

A.           Organization and Authority.

 

1.           Organization Matters of Company and Its Subsidiaries.

 

a)Company is validly existing and in good standing under the laws of the State
of Maryland and has all requisite corporate power and authority to conduct its
business and activities as presently conducted, to own its properties, and to
perform its obligations under the Transaction Documents. Company is duly
qualified as a foreign corporation to transact business and is in good standing
in each other jurisdiction in which such qualification is required, whether by
reason of the ownership or leasing of property or the conduct of business,
except where the failure so to qualify or to be in good standing would not
result in a Material Adverse Effect. Company is duly registered as a bank
holding company under the Bank Holding Company Act of 1956, as amended.

 

b)Each Subsidiary other than the Bank either has been duly organized and is
validly existing as a corporation or limited liability company, or, in the case
of the Bank, has been duly chartered and is validly existing as a Massachusetts
chartered cooperative bank, in each case in good standing under the laws of the
jurisdiction of its incorporation, has corporate power and authority to own,
lease and operate its properties and to conduct its business and is duly
qualified as a foreign corporation to transact business and is in good standing
in each jurisdiction in which such qualification is required, whether by reason
of the ownership or leasing of property or the conduct of business, except where
the failure so to qualify or to be in good standing would not result in a
Material Adverse Effect. All of the issued and outstanding shares of capital
stock or other equity interests in each Subsidiary have been duly authorized and
validly issued, are fully paid and non-assessable and are owned by Company,
directly or through Subsidiaries, free and clear of any security interest,
mortgage, pledge, lien, encumbrance or claim; none of the outstanding shares of
capital stock of, or other equity interests in, any Subsidiary were issued in
violation of the preemptive or similar rights of any securityholder of such
Subsidiary or any other entity.

 

c)The deposit accounts of Bank are insured by the FDIC up to applicable limits.
Neither Company nor Bank has received any notice or other information indicating
that Bank is not an “insured depository institution” as defined in 12 U.S.C.
Section 1813, nor has any event occurred which could reasonably be expected to
adversely affect the status of Bank as an FDIC-insured institution.

 

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2.           Capital Stock and Related Matters. All of the outstanding capital
stock of Company has been duly authorized and validly issued and is fully paid
and nonassessable. There are, as of the date hereof, no outstanding options,
rights, warrants or other agreements or instruments obligating Company to issue,
deliver or sell, or cause to be issued, delivered or sold, additional shares of
the capital stock of Company or obligating Company to grant, extend or enter
into any such agreement or commitment to any Person other than Company except
(i) as described in Company’s SEC Reports or (ii) pursuant to employment
arrangements, agreements or understanding or Company’s equity incentive plans
duly adopted by Company’s Board of Directors.

 

3.           Subsidiaries. Each of Company’s Subsidiaries that is a “significant
subsidiary” as defined in Rule 1-02 of Regulation S-X is reflected in its Annual
Report on Form 10-K for the fiscal year ended December 31, 2014.

 

B.           No Impediment to Transactions.

 

1.           Transaction is Legal and Authorized. The issuance of the
Subordinated Notes, the borrowing of the aggregate of the Subordinated Note
Amounts, the execution of the Transaction Documents and compliance by Company
with all of the provisions of the Transaction Documents are within the corporate
and other powers of Company.

 

2.           Agreement. The Agreement has been duly authorized, executed and
delivered, and, assuming due authorization, execution and delivery by the other
parties thereto, are the legal, valid and binding obligations of Company,
enforceable in accordance with their terms, except as enforcement thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to or affecting creditors’ rights generally or by general
equitable principles.

 

3.           Subordinated Notes. The Subordinated Notes have been duly
authorized by Company and when executed by Company and issued, delivered to and
paid for by the Purchasers in accordance with the terms of the Agreement, will
have been duly executed, authenticated, issued and delivered and will constitute
legal, valid and binding obligations of Company, and enforceable in accordance
with their terms, except as enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting creditors’ rights generally or by general equitable principles.

 

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4.           No Defaults or Restrictions. Neither the execution and delivery of
the Transaction Documents nor compliance with their respective terms and
conditions will (whether with or without the giving of notice or lapse of time
or both) (i) violate, conflict with or result in a breach of, or constitute a
default under: (1) the Articles of Incorporation or Bylaws of Company; (2) any
of the terms, obligations, covenants, conditions or provisions of any corporate
restriction or of any contract, agreement, indenture, mortgage, deed of trust,
pledge, bank loan or credit agreement, or any other agreement or instrument to
which Company or Bank, as applicable, is now a party or by which it or any of
its properties may be bound or affected; (3) any judgment, order, writ,
injunction, decree or demand of any court, arbitrator, grand jury, or
Governmental Agency applicable to Company or Bank; or (4) any statute, rule or
regulation applicable to Company, except, in the case of items (2), (3) or (4),
for such violations, conflicts, breaches or defaults that would not reasonably
be expected to have, singularly or in the aggregate, a Material Adverse Effect
on Company and its Subsidiaries, taken as a whole, or (ii) result in the
creation or imposition of any lien, charge or encumbrance of any nature
whatsoever upon any property or asset of Company or any subsidiary. Neither
Company nor Bank is in default in the performance, observance or fulfillment of
any of the terms, obligations, covenants, conditions or provisions contained in
any Material Contract creating, evidencing or securing Indebtedness of any kind
or pursuant to which any such Indebtedness is issued, or any other Material
Contract, except for in each case, only such defaults that would not reasonably
be expected to have, singularly or in the aggregate, a Material Adverse Effect
on Company.

 

5.           Governmental Consent. No governmental orders, permissions,
consents, approvals or authorizations are required to be obtained by Company
that have not been obtained, and no registrations or declarations are required
to be filed by Company that have not been filed in connection with, or, in
contemplation of, the execution and delivery of, and performance under, the
Transaction Documents, except for applicable requirements, if any, of the
Securities Act, the Exchange Act or state securities laws or “blue sky” laws of
the various states and any applicable federal or state banking laws and
regulations.

 

C.           Possession of Licenses and Permits. Company and its Subsidiaries
possess such permits, licenses, approvals, consents and other authorizations
(collectively, “Governmental Licenses”) issued by the appropriate Governmental
Agencies necessary to conduct the business now operated by it except where the
failure to possess such Governmental Licenses would not, singularly or in the
aggregate, have a Material Adverse Effect on Company or such applicable
Subsidiary; Company and each Subsidiary of Company is in compliance with the
terms and conditions of all such Governmental Licenses, except where the failure
so to comply would not, singly or in the aggregate, have a Material Adverse
Effect on Company or such applicable Subsidiary of Company; all of the
Governmental Licenses are valid and in full force and effect, except where the
invalidity of such Governmental Licenses or the failure of such Governmental
Licenses to be in full force and effect would not have a Material Adverse Effect
on Company or such applicable Subsidiary of Company; and neither Company nor any
Subsidiary of Company has received any notice of proceedings relating to the
revocation or modification of any such Governmental Licenses.

 

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D.           Financial Condition.

 

1.Company Financial Statements. The financial statements of Company included in
Company’s SEC Reports (including the related notes, where applicable) (i) have
been prepared from, and are in accordance with, the books and records of
Company; (ii) fairly present in all material respects the results of operations,
cash flows, changes in stockholders’ equity and financial position of Company
and its consolidated Subsidiaries, for the respective fiscal periods or as of
the respective dates therein set forth (subject in the case of unaudited
statements to recurring year-end audit adjustments normal in nature and amount),
as applicable; (iii) complied as to form, as of their respective dates of filing
in all material respects with applicable accounting and banking requirements as
applicable, with respect thereto; and (iv) have been prepared in accordance with
GAAP consistently applied during the periods involved, except, in each case, as
indicated in such statements or in the notes thereto and Regulation S-X
promulgated under the Securities Act. The books and records of Company have
been, and are being, maintained in all material respects in accordance with GAAP
and any other applicable legal and accounting requirements. Company does not
have any material liability of any nature whatsoever (whether absolute, accrued,
contingent or otherwise and whether due or to become due), except for those
liabilities that are reflected or reserved against on the consolidated balance
sheet of Company contained in Company’s SEC Reports for Company’s most recently
completed quarterly or annual fiscal period, as applicable, and for liabilities
incurred in the ordinary course of business consistent with past practice or in
connection with this Agreement and the transactions contemplated hereby.

 

2.Absence of Default. Since the date of the latest audited financial statements
included in Company’s SEC Reports, no event has occurred which either of itself
or with the lapse of time or the giving of notice or both, would give any
creditor of Company the right to accelerate the maturity of any material
Indebtedness of Company. Company is not in default under any other Lease,
agreement or instrument, or any law, rule, regulation, order, writ, injunction,
decree, determination or award, non-compliance with which could reasonably be
expected to result in a Material Adverse Effect on Company.

 

3.Solvency. After giving effect to the consummation of the transactions
contemplated by this Agreement, Company has capital sufficient to carry on its
business and transactions and is solvent and able to pay its debts as they
mature. No transfer of property is being made and no Indebtedness is being
incurred in connection with the transactions contemplated by this Agreement with
the intent to hinder, delay or defraud either present or future creditors of
Company or any Subsidiary of Company.

 

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4.Ownership of Property. Company and each of its Subsidiaries has good and
marketable title as to all real property owned by it and good title to all
assets and properties owned by Company and such Subsidiary in the conduct of its
businesses, whether such assets and properties are real or personal, tangible or
intangible, including assets and property reflected in the most recent balance
sheet contained in Company’s SEC Reports or acquired subsequent thereto (except
to the extent that such assets and properties have been disposed of in the
ordinary course of business, since the date of such balance sheet), subject to
no encumbrances, liens, mortgages, security interests or pledges, except (i)
those items which secure liabilities for public or statutory obligations or any
discount with, borrowing from or other obligations to the Federal Home Loan
Bank, inter-bank credit facilities, reverse repurchase agreements or any
transaction by Bank acting in a fiduciary capacity, (ii) statutory liens for
amounts not yet delinquent or which are being contested in good faith and (iii)
such as do not, singly or in the aggregate, materially affect the value of such
property and do not materially interfere with the use made and proposed to be
made of such property by Company or any of its Subsidiaries. Company and each of
its Subsidiaries, as lessee, has the right under valid and existing leases of
real and personal properties that are material to Company or such Subsidiary, as
applicable, in the conduct of its business to occupy or use all such properties
as presently occupied and used by it. Such existing leases and commitments to
lease constitute or will constitute operating leases for both tax and financial
accounting purposes and the lease expense and minimum rental commitments with
respect to such leases and lease commitments are as disclosed in all material
respects in Company’s SEC Reports.

 

E.          No Material Adverse Change. Since the date of the latest audited
financial statements included in Company’s SEC Reports, there has been no
development or event which has had or could reasonably be expected to have a
Material Adverse Effect on Company or any of its Subsidiaries.

 

F.          Legal Matters.

 

1.Compliance with Law. Company and each of its Subsidiaries (i) has complied
with and (ii) is not under investigation with respect to, and, to Company’s
knowledge, have not been threatened to be charged with or given any notice of
any material violation of any applicable statutes, rules, regulations, orders
and restrictions of any domestic or foreign government, or any instrumentality
or agency thereof, having jurisdiction over the conduct of its business or the
ownership of its properties, except where any such failure to comply or
violation would not reasonably be expected to have a Material Adverse Effect on
Company or any of its Subsidiaries.

 

12 

 

 

2.Regulatory Enforcement Actions. Company, Bank and its other Subsidiaries are
in compliance with all laws administered by and regulations of any Governmental
Agency applicable to it or to them, except where the failure to so comply would
have a Material Adverse Effect. None of Company, Bank, Company’s Subsidiaries
nor any of their officers or directors is now operating under any restrictions,
agreements, memoranda, or commitments (other than restrictions of general
application) imposed by any Governmental Agency, nor are, to Company’s
knowledge, (a) any such restrictions threatened or (b) any agreements, memoranda
or commitments being sought by any Governmental Agency.

 

3.Pending Litigation. There are no actions, suits, proceedings or written
agreements pending, or, to Company’s knowledge, threatened or proposed, against
Company, Bank, or any of its other Subsidiaries at law or in equity or before or
by any federal, state, municipal, or other governmental department, commission,
board, or other administrative agency, domestic or foreign, that, either
separately or in the aggregate, would reasonably be expected to have a Material
Adverse Effect on Company and any of its Subsidiaries, taken as a whole, or
affect issuance or payment of the Subordinated Notes; and neither Company nor
any of its Subsidiaries is a party to or named as subject to the provisions of
any order, writ, injunction, or decree of, or any written agreement with, any
court, commission, board or agency, domestic or foreign, that either separately
or in the aggregate, will have a Material Adverse Effect on Company and any of
its Subsidiaries, taken as a whole.

 

4.Environmental. No Property is or, to Company’s knowledge, has been a site for
the use, generation, manufacture, storage, treatment, release, threatened
release, discharge, disposal, transportation or presence of any Hazardous
Materials and neither Company nor any of its Subsidiaries has engaged in such
activities. There are no claims or actions pending or, to Company’s knowledge,
threatened against Company or any of its Subsidiaries by any Governmental Agency
or by any other Person relating to any Hazardous Materials or pursuant to any
Hazardous Materials Law.

 

5.Brokerage Commissions. Except for commissions paid to the Placement Agent,
neither Company nor any Affiliate of Company is obligated to pay any brokerage
commission or finder’s fee to any Person in connection with the transactions
contemplated by this Agreement.

 

6.Investment Company Act. Neither Company nor any of its Subsidiaries is an
“investment company” or a company “controlled” by an “investment company,”
within the meaning of the Investment Company Act of 1940, as amended.

 

G.           No Misstatement. No information, exhibit, report, schedule or
document, when viewed together as a whole, furnished by Company to Purchasers in
connection with the negotiation, execution or performance of this Agreement
contains any untrue statement of a material fact, or omits to state a material
fact necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading.

 

13 

 

 

H.           Reporting Compliance. Company is subject to, and is in compliance
in all material respects with, the reporting requirements of Section 13 and
Section 15(d), as applicable, of the Securities Exchange Act of 1934, as
amended, and the rules and the regulations of the SEC thereunder (collectively,
the “Exchange Act”). Company’s SEC Reports at the time they were or hereafter
are filed with the SEC, complied in all material respects with the requirements
of the Exchange Act and did not and do not include any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.

 

I.           Internal Control Over Financial Reporting. Company and its
Subsidiaries maintain systems of “internal control over financial reporting” (as
defined in Rule 13a-15(f) of the Exchange Act) that comply with the requirements
of the Exchange Act and have been designed by, or under the supervision of,
their respective principal executive and principal financial officers, or
persons performing similar functions, to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with GAAP, including, but not
limited to, a system of accounting controls sufficient to provide reasonable
assurances that (i) transactions are executed in accordance with management’s
general or specific authorizations; (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with GAAP and to
maintain accountability for assets; (iii) access to assets is permitted only in
accordance with management’s general or specific authorization; and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences. Since the end of Company’s most recent audited fiscal year, (y)
Company has no knowledge of (i) any material weakness in Company’s internal
control over financial reporting (whether or not remediated) or (ii) any fraud,
whether or not material, that involves management or other employees who have a
significant role in Company’s internal controls and (z) there has been no change
in Company’s internal control over financial reporting that has materially
affected, or is reasonably likely to materially affect, Company’s internal
control over financial reporting.

 

J.           Disclosure Controls and Procedures. Company and its Subsidiaries
maintain an effective system of disclosure controls and procedures (as defined
in Rule 13a-15 and Rule 15d-15 of the Exchange Act), that (i) are designed to
ensure that information required to be disclosed by Company in the reports that
it files or submits under the Exchange Act is recorded, processed, summarized
and reported within the time periods specified in the SEC’s rules and forms and
that material information relating to Company and its Subsidiaries is made known
to Company’s principal executive officer and principal financial officer by
others within Company and its Subsidiaries to allow timely decisions regarding
disclosure, and (ii) are effective in all material respects to perform the
functions for which they were established. As of the date hereof, Company has no
knowledge that would reasonably cause it to believe that the evaluation to be
conducted of the effectiveness of Company’s disclosure controls and procedures
for the most recently ended fiscal quarter period will result in a finding that
such disclosure controls and procedures are ineffective for such quarter ended.
Based on the evaluation of Company’s and each Subsidiary’s disclosure controls
and procedures described above, Company is not aware of (1) any significant
deficiency in the design or operation of internal controls which could adversely
affect Company’s ability to record, process, summarize and report financial data
or any material weaknesses in internal controls or (2) any fraud, whether or not
material, that involves management or other employees who have a significant
role in Company’s internal controls. Since the most recent evaluation of
Company’s disclosure controls and procedures described above, there have been no
significant changes in internal controls or in other factors that could
significantly affect internal controls.

 

14 

 

 

K.           No Registration. No person has the right to require Company or any
of its Subsidiaries to register any securities for sale under the Securities Act
by reason of the issuance and sale of the Subordinated Notes to be sold by
Company hereunder.

 

L.           Representations and Warranties Generally. The representations and
warranties of Company set forth in this Agreement are true and correct as of the
date hereof and will be true and correct as of the Closing Date and as otherwise
specifically provided herein. Any certificate signed by an officer of Company
and delivered to the Purchasers or to counsel for Purchasers shall be deemed to
be a representation and warranty by Company to the Purchasers as to the matters
set forth therein.

 

V.           GENERAL COVENANTS, CONDITIONS AND AGREEMENTS

 

Company hereby further covenants and agrees with each Purchaser as follows:

 

A.           Compliance with Transaction Documents. Company shall comply with,
observe and timely perform each and every one of the covenants, agreements and
obligations under the Transaction Documents.

 

B.           Compliance with Laws.

 

1.           Generally. Company shall comply and cause Bank and each other
Subsidiary to comply with all applicable statutes, rules, regulations, orders
and restrictions in respect of the conduct of its business and the ownership of
its properties, except, in each case, where such noncompliance would not
reasonably be expected to have a Material Adverse Effect on Company.

 

2.           Regulated Activities. Company shall not itself, nor shall it cause,
permit or allow Bank or any other Subsidiary to (i) engage in any business or
activity not permitted by all applicable laws and regulations, except where such
business or activity would not reasonably be expected to have a Material Adverse
Effect on Company, Bank and/or such Subsidiary or (ii) make any loan or advance
secured by the capital stock of another bank or depository institution, or
acquire the capital stock, assets or obligations of or any interest in another
bank or depository institution, in each case other than in accordance with
applicable laws and regulations and safe and sound banking practices.

 

3.           Taxes. Company shall and shall cause Bank and any other Subsidiary
to promptly pay and discharge all material taxes, assessments and other
governmental charges imposed upon Company, Bank or any other Subsidiary or upon
the income, profits, or property of Company or any Subsidiary and all claims for
labor, material or supplies which, if unpaid, might by law become a lien or
charge upon the property of Company, Bank or any other Subsidiary.
Notwithstanding the foregoing, none of Company, Bank or any other Subsidiary
shall be required to pay any such tax, assessment, charge or claim, so long as
the validity thereof shall be contested in good faith by appropriate
proceedings, and appropriate reserves therefor shall be maintained on the books
of Company, Bank and such other Subsidiary.

 

15 

 

 

4.           Dividends, Payments, and Guarantees During Event of Default. During
the continuance of an Event of Default (as defined under the Subordinated Notes)
and except as required by any federal or state Governmental Agency, Company
agrees not to (a) declare or pay any dividends on, or redeem, purchase, acquire
or make a liquidation payment with respect to, any of its capital stock; (b)
make any payment of principal of, or interest or premium, if any, on, or repay,
repurchase or redeem any of Company’s debt that ranks equal with or junior to
the Subordinated Notes; or (c) make any payments under any guarantee that ranks
equal with or junior to the Subordinated Notes, other than (i) any dividends or
distributions in shares of, or options, warrants or rights to subscribe for or
purchase shares of, any class of Company’s common stock; (ii) any declaration of
a dividend in connection with the implementation of a shareholders’ rights plan,
or the issuance of stock under any such plan in the future, or the redemption or
repurchase of any such rights pursuant thereto; (iii) as a result of a
reclassification of Company’s capital stock or the exchange or conversion of one
class or series of Company’s capital stock for another class or series of
Company’s capital stock; (iv) the purchase of fractional interests in shares of
Company’s capital stock pursuant to the conversion or exchange provisions of
such capital stock or the security being converted or exchanged; or (v)
purchases of any class of Company’s common stock related to the issuance of
common stock or rights under any benefit plans for Company’s directors, officers
or employees or any of Company’s dividend reinvestment plans.

 

5.           Tier 2 Capital. If all or any portion of the Subordinated Notes
ceases to be deemed to be Tier 2 Capital, other than due to the limitation
imposed on the capital treatment of subordinated debt during the five (5) years
immediately preceding the Maturity Date of the Subordinated Notes, Company will
immediately notify the Purchasers, and thereafter Company and the Purchasers
will work together in good faith to execute and deliver all agreements as
reasonably necessary in order to restructure the applicable portions of the
obligations evidenced by the Subordinated Notes to qualify as Tier 2 Capital;
provided, however, that nothing contained in this Agreement shall limit
Company’s right to redeem the Subordinated Notes upon the occurrence of a Tier 2
Capital Event as described in the Subordinated Notes.

 

D.           Absence of Control. It is the intent of the parties to this
Agreement that in no event shall Purchasers, by reason of any of the Transaction
Documents, be deemed to control, directly or indirectly, Company, and Purchasers
shall not exercise, or be deemed to exercise, directly or indirectly, a
controlling influence over the management or policies of Company.

 

16 

 

 

E.           Secondary Market Transactions. Each Purchaser shall have the right
at any time and from time to time to securitize its Subordinated Notes or any
portion thereof in a single asset securitization or a pooled loan securitization
of rated single or multi-class securities secured by or evidencing ownership
interests in the Subordinated Notes (each such securitization is referred to
herein as a “Secondary Market Transaction”). In connection with any such
Secondary Market Transaction, Company shall, at Company’s expense, cooperate
with Purchasers and otherwise reasonably assist Purchasers in satisfying the
market standards to which Purchasers customarily adhere or which may be
reasonably required in the marketplace or by applicable rating agencies in
connection with any such Secondary Market Transaction. Subject to any written
confidentiality obligation, all information regarding Company may be furnished,
without liability except in the case of gross negligence or willful misconduct,
to any Purchaser and to any Person reasonably deemed necessary by Purchaser in
connection with participation in such Secondary Market Transaction. All
documents, financial statements, appraisals and other data relevant to Company
or the Subordinated Notes may be retained by any such Person.

 

F.           Bloomberg. Within 30 days after Closing, Company shall use
commercially reasonable efforts to cause the Subordinated Notes to be identified
on Bloomberg.

 

VI.           REPRESENTATIONS, WARRANTIES AND COVENANTS OF PURCHASERS

 

Each Purchaser hereby represents and warrants to Company, and covenants with
Company, severally and not jointly, as follows:

 

A.           Legal Power and Authority. It has all necessary power and authority
to execute, deliver and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby. It is an entity duly organized,
validly existing and in good standing under the laws its jurisdiction of
organization.

 

B.           Authorization and Execution. The execution, delivery and
performance of this Agreement has been duly authorized by all necessary action
on the part of such Purchaser, and this Agreement is a legal, valid and binding
obligation of such Purchaser, enforceable against such Purchaser in accordance
with its terms, except as enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting creditors’ rights generally or by general equitable principles.

 

C.           No Conflicts. Neither the execution, delivery or performance of the
Transaction Documents nor the consummation of any of the transactions
contemplated thereby will conflict with, violate, constitute a breach of or a
default (whether with or without the giving of notice or lapse of time or both)
under (i) its organizational documents, (ii) any agreement to which it is party,
(iii) any law applicable to it or (iv) any order, writ, judgment, injunction,
decree, determination or award binding upon or affecting it.

 

D.           Purchase for Investment. It is purchasing the Subordinated Note for
its own account and not with a view to distribution and with no present
intention of reselling, distributing or otherwise disposing of the same. It has
no present or contemplated agreement, undertaking, arrangement, obligation,
indebtedness or commitment providing for, or which is likely to compel, a
disposition of the Subordinated Notes in any manner.

 

17 

 

 

E.           Institutional Accredited Investor. It is and will be on the Closing
Date an institutional “accredited investor” as such term is defined in Rule
501(a) of Regulation D and as contemplated by subsections (1), (2), (3) and (7)
of Rule 501(a) of Regulation D, and has no less than $5,000,000 in total assets.

 

F.           Financial and Business Sophistication. It has such knowledge and
experience in financial and business matters that it is capable of evaluating
the merits and risks of the prospective investment in the Subordinated Notes. It
has relied solely upon its own knowledge of, and/or the advice of its own legal,
financial or other advisors with regard to, the legal, financial, tax and other
considerations involved in deciding to invest in the Subordinated Notes.

 

G.           Ability to Bear Economic Risk of Investment. It recognizes that an
investment in the Subordinated Notes involves substantial risk. It has the
ability to bear the economic risk of the prospective investment in the
Subordinated Notes, including the ability to hold the Subordinated Notes
indefinitely, and further including the ability to bear a complete loss of all
of its investment in Company.

 

H.           Information. It acknowledges that: (i) it is not being provided
with the disclosures that would be required if the offer and sale of the
Subordinated Notes were registered under the Securities Act, nor is it being
provided with any offering circular or prospectus prepared in connection with
the offer and sale of the Subordinated Notes; (ii) it has conducted its own
examination of Company and the terms of the Subordinated Notes to the extent it
deems necessary to make its decision to invest in the Subordinated Notes; and
(iii) it has availed itself of publicly available financial and other
information concerning Company to the extent it deems necessary to make its
decision to purchase the Subordinated Notes. It has reviewed the information set
forth in Company’s SEC Reports and the exhibits and schedules hereto and
contained in the data room established by Company on December 2, 2015.

 

I.           Access to Information. It acknowledges that it and its advisors
have been furnished with all materials relating to the business, finances and
operations of Company that have been requested of it or its advisors and have
been given the opportunity to ask questions of, and to receive answers from,
persons acting on behalf of Company concerning terms and conditions of the
transactions contemplated by this Agreement in order to make an informed and
voluntary decision to enter into this Agreement.

 

J.           Investment Decision. It has made its own investment decision based
upon its own judgment, due diligence and advice from such advisors as it has
deemed necessary and not upon any view expressed by any other person or entity,
including the Placement Agent. Neither such inquiries nor any other due
diligence investigations conducted by it or its advisors or representatives, if
any, shall modify, amend or affect its right to rely on Company’s
representations and warranties contained herein. It is not relying upon, and has
not relied upon, any advice, statement, representation or warranty made by any
Person by or on behalf of Company, including, without limitation, the Placement
Agent, except for the express statements, representations and warranties of
Company made or contained in this Agreement. Furthermore, it acknowledges that
(i) the Placement Agent has not performed any due diligence review on behalf of
it and (ii) nothing in this Agreement or any other materials presented by or on
behalf of Company to it in connection with the purchase of the Subordinated
Notes constitutes legal, tax or investment advice.

 

18 

 

 

K.           Private Placement; No Registration; Restricted Legends. It
understands and acknowledges that the Subordinated Notes are being sold by
Company without registration under the Securities Act in reliance on the
exemption from federal and state registration set forth in, respectively, Rule
506(b) of Regulation D under Section 4(a)(2) of the Securities Act and Section
18 of the Securities Act, or any state securities laws, and accordingly, may be
resold, pledged or otherwise transferred only if exemptions from the Securities
Act and applicable state securities laws are available to it. It is not
subscribing for the Subordinated Notes as a result of or subsequent to any
advertisement, article, notice or other communication published in any
newspaper, magazine or similar media or broadcast over television or radio, or
presented at any seminar or meeting. It further acknowledges and agrees that all
certificates or other instruments representing the Subordinated Notes will bear
the restrictive legend set forth in the form of Subordinated Note. It further
acknowledges its primary responsibilities under the Securities Act and,
accordingly, will not sell or otherwise transfer the Subordinated Notes or any
interest therein without complying with the requirements of the Securities Act
and the rules and regulations promulgated thereunder and the requirements set
forth in this Agreement.

 

L.           Placement Agent. It will purchase the Subordinated Note(s) directly
from Company and not from the Placement Agent and understands that neither the
Placement Agent nor any other broker or dealer has any obligation to make a
market in the Subordinated Notes.

 

M.           Tier 2 Capital. If all or any portion of the Subordinated Notes
ceases to be deemed to be Tier 2 Capital, other than due to the limitation
imposed on the capital treatment of subordinated debt during the five (5) years
immediately preceding the Maturity Date of the Subordinated Notes, Company will
immediately notify the Purchasers, and thereafter Company and the Purchasers
will work together in good faith to execute and deliver all agreements as
reasonably necessary in order to restructure the applicable portions of the
obligations evidenced by the Subordinated Notes to qualify as Tier 2 Capital;
provided, however, that nothing contained in this Agreement shall limit
Company’s right to redeem the Subordinated Notes upon the occurrence of a Tier 2
Capital Event as described in the Subordinated Notes.

 

N.           Accuracy of Representations. It understands that each of the
Placement Agent and Company will rely upon the truth and accuracy of the
foregoing representations, acknowledgements and agreements in connection with
the transactions contemplated by this Agreement, and agrees that if any of the
representations or acknowledgements made by it are no longer accurate as of the
Closing Date, or if any of the agreements made by it are breached on or prior to
the Closing Date, it shall promptly notify the Placement Agent and Company.

 

O.           Representations and Warranties Generally. The representations and
warranties of Purchaser set forth in this Agreement are true and correct as of
the date hereof and will be true and correct as of the Closing Date and as
otherwise specifically provided herein. Any certificate signed by a duly
authorized representative of Purchaser and delivered to the Company or to
counsel for Company shall be deemed to be a representation and warranty by
Purchaser to Company as to the matters set forth therein.

 

19 

 

 

VII.       TERMINATION.

 

Purchasers may terminate this Agreement (i) at any time prior to the Closing
Date by written notice signed by all Purchasers to Company if Purchasers shall
decline to purchase the Subordinated Notes for any reason permitted by this
Agreement or (ii) on the Closing Date if any condition described in Section
III.B is not fulfilled by the Company or waived in writing by the Purchasers on
or prior to the Closing Date. Any termination pursuant to this Section shall be
without liability on the part of (a) Company to Purchasers or (b) Purchasers to
Company.

 

VIII.     MISCELLANEOUS.

 

A.           Prohibition on Assignment by Company. Except as described in
Section 8 (Merger and Sale of Assets) of the Subordinated Notes, Company may not
assign, transfer or delegate any of its rights under this Agreement or the
Subordinated Notes without the prior written consent of Purchasers. In addition,
in accordance with the terms of the Subordinated Notes, any transfer of such
Subordinated Notes must be made in accordance with the Assignment Form attached
thereto and the requirements and restrictions thereof.

 

B.           Time of the Essence. Time is of the essence of this Agreement.

 

C.           Waiver or Amendment. No waiver or amendment of any term, provision,
condition, covenant or agreement herein or in the Subordinated Notes shall be
effective except with the consent of the holders of not less than more than
fifty percent (50%) in aggregate principal amount (excluding any Subordinated
Notes held by Company or any of its Affiliates) of the Subordinated Notes at the
time outstanding; provided, however, that without the consent of each holder of
an affected Subordinated Note, no such amendment or waiver may: (i) reduce the
principal amount of the Subordinated Note; (ii) reduce the rate of or change the
time for payment of interest on any Subordinated Note; (iii) extend the maturity
of any Subordinated Note; (iv) change the currency in which payment of the
obligations of Company under this Agreement and the Subordinated Notes are to be
made; (v) lower the percentage of aggregate principal amount of outstanding
Subordinated Notes required to approve any amendment of this Agreement or the
Subordinated Notes; (vi) make any changes to Section 6 (Failure to Make
Payments) of the Subordinated Notes that adversely affects the rights of any
holder of a Subordinated Note; or (vii) disproportionately affect the rights of
any of the holders of the then outstanding Subordinated Notes under this
Agreement and the Subordinated Notes. Notwithstanding the foregoing, Company may
amend or supplement the Subordinated Notes without the consent of the holders of
the Subordinated Notes to cure any ambiguity, defect or inconsistency or to
provide for uncertificated Subordinated Notes in addition to or in place of
certificated Subordinated Notes, or to make any change that does not adversely
affect the rights of any holder of any of the Subordinated Notes. No failure to
exercise or delay in exercising, by a Purchaser or any holder of the
Subordinated Notes, of any right, power or privilege hereunder shall operate as
a waiver thereof, nor shall any single or partial exercise of any right, power
or privilege preclude any other or further exercise thereof, or the exercise of
any other right or remedy provided by law. The rights and remedies provided in
this Agreement are cumulative and not exclusive of any right or remedy provided
by law or equity. No notice or demand on Company in any case shall, in itself,
entitle Company to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the rights of the Purchasers to any
other or further action in any circumstances without notice or demand. No
consent or waiver, expressed or implied, by the Purchasers to or of any breach
or default by Company in the performance of its obligations hereunder shall be
deemed or construed to be a consent or waiver to or of any other breach or
default in the performance of the same or any other obligations of Company
hereunder. Failure on the part of the Purchasers to complain of any acts or
failure to act or to declare an Event of Default, irrespective of how long such
failure continues, shall not constitute a waiver by the Purchasers of their
rights hereunder or impair any rights, powers or remedies on account of any
breach or default by Company.

 

20 

 

 

D.           Severability. Any provision of this Agreement which is
unenforceable or invalid or contrary to law, or the inclusion of which would
adversely affect the validity, legality or enforcement of this Agreement, shall
be of no effect and, in such case, all the remaining terms and provisions of
this Agreement shall subsist and be fully effective according to the tenor of
this Agreement the same as though any such invalid portion had never been
included herein. Notwithstanding any of the foregoing to the contrary, if any
provisions of this Agreement or the application thereof are held invalid or
unenforceable only as to particular persons or situations, the remainder of this
Agreement, and the application of such provision to persons or situations other
than those to which it shall have been held invalid or unenforceable, shall not
be affected thereby, but shall continue valid and enforceable to the fullest
extent permitted by law.

 

21 

 

 

E.           Notices. Any notice which any party hereto may be required or may
desire to give hereunder shall be deemed to have been given if in writing and if
delivered personally, or if mailed, postage prepaid, by United States registered
or certified mail, return receipt requested, or if delivered by a responsible
overnight commercial courier promising next business day delivery, addressed:

 

if to Company:

Wellesley Bancorp, Inc.

40 Central Street

Wellesley, Massachusetts 02482

Attention: Thomas J. Fontaine, President and Chief Executive Officer

Email: tom@wellesleybank.com

    with a copy to:

Kilpatrick Townsend & Stockton LLP

607 14th Street, N.W.

Washington, D.C. 20007

Gary R. Bronstein

Edward G. Olifer

Email: gbronstein@kilpatricktownsend.com

eolifer@kilpatricktownsend.com

      Attention:     if to Purchasers: To the address indicated on such
Purchaser’s signature page.

 

or to such other address or addresses as the party to be given notice may have
furnished in writing to the party seeking or desiring to give notice, as a place
for the giving of notice; provided that no change in address shall be effective
until five (5) Business Days after being given to the other party in the manner
provided for above. Any notice given in accordance with the foregoing shall be
deemed given when delivered personally or, if mailed, three (3) Business Days
after it shall have been deposited in the United States mails as aforesaid or,
if sent by overnight courier, the Business Day following the date of delivery to
such courier (provided next business day delivery was requested).

 

F.           Successors and Assigns. This Agreement shall inure to the benefit
of the parties and their respective heirs, legal representatives, successors and
assigns; except that, unless a Purchaser consents in writing, no assignment made
by Company in violation of this Agreement shall be effective or confer any
rights on any purported assignee of Company. The term “successors and assigns”
will not include a purchaser of any of the Subordinated Notes from any Purchaser
merely because of such purchase.

 

22 

 

 

G.           No Joint Venture. Nothing contained herein or in any document
executed pursuant hereto and no action or inaction whatsoever on the part of a
Purchaser, shall be deemed to make a Purchaser a partner or joint venturer with
Company.

 

H.           Documentation. All documents and other matters required by any of
the provisions of this Agreement to be submitted or furnished to a Purchaser
shall be in form and substance satisfactory to such Purchaser.

 

I.           Entire Agreement. This Agreement and the Subordinated Notes along
with the Exhibits thereto constitute the entire agreement between the parties
hereto with respect to the subject matter hereof and may not be modified or
amended in any manner other than by supplemental written agreement executed by
the parties hereto. No party, in entering into this Agreement, has relied upon
any representation, warranty, covenant, condition or other term that is not set
forth in this Agreement or in the Subordinated Notes.

 

J.           Choice of Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without giving effect to its
laws or principles of conflict of laws. Nothing herein shall be deemed to limit
any rights, powers or privileges which a Purchaser may have pursuant to any law
of the United States of America or any rule, regulation or order of any
department or agency thereof and nothing herein shall be deemed to make unlawful
any transaction or conduct by a Purchaser which is lawful pursuant to, or which
is permitted by, any of the foregoing.

 

K.           No Third Party Beneficiary. This Agreement is made for the sole
benefit of Company and the Purchasers, and no other person shall be deemed to
have any privity of contract hereunder nor any right to rely hereon to any
extent or for any purpose whatsoever, nor shall any other person have any right
of action of any kind hereon or be deemed to be a third party beneficiary
hereunder; provided, that the Placement Agent may rely on the representations
and warranties contained herein and any certificates or other documents
delivered in connection with the Closing to the same extent as if it were a
party to this Agreement.

 

L.           Legal Tender of United States. All payments hereunder shall be made
in coin or currency which at the time of payment is legal tender in the United
States of America for public and private debts.

 

M.           Captions; Counterparts. Captions contained in this Agreement in no
way define, limit or extend the scope or intent of their respective provisions.
This Agreement may be executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which when so executed and
delivered shall be deemed to be an original and all of which taken together
shall constitute but one and the same instrument. In the event that any
signature is delivered by facsimile transmission, or by e-mail delivery of a
“.pdf” format data file, such signature shall create a valid and binding
obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile signature page
were an original thereof.

 

23 

 

 

N.           Knowledge; Discretion. All references herein to Purchaser’s or
Company’s knowledge shall be deemed to mean the knowledge of such party based on
the actual knowledge of such party’s Chief Executive Officer and Chief Financial
Officer or such other persons holding equivalent offices. Unless specified to
the contrary herein, all references herein to an exercise of discretion or
judgment by a Purchaser, to the making of a determination or designation by a
Purchaser, to the application of a Purchaser’s discretion or opinion, to the
granting or withholding of a Purchaser’s consent or approval, to the
consideration of whether a matter or thing is satisfactory or acceptable to a
Purchaser, or otherwise involving the decision making of a Purchaser, shall be
deemed to mean that such Purchaser shall decide using the reasonable discretion
or judgment of a prudent lender.

 

O.           Waiver Of Right To Jury Trial. TO THE EXTENT PERMITTED UNDER
APPLICABLE LAW, THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVE ANY RIGHT THAT THEY MAY HAVE TO A TRIAL BY JURY IN ANY LITIGATION ARISING
IN ANY WAY IN CONNECTION WITH ANY OF THE TRANSACTION DOCUMENTS, OR ANY OTHER
STATEMENTS OR ACTIONS OF COMPANY OR PURCHASERS. THE PARTIES ACKNOWLEDGE THAT
THEY HAVE BEEN REPRESENTED IN THE SIGNING OF THIS AGREEMENT AND IN THE MAKING OF
THIS WAIVER BY INDEPENDENT LEGAL COUNSEL SELECTED OF THEIR OWN FREE WILL. THE
PARTIES FURTHER ACKNOWLEDGE THAT (i) THEY HAVE READ AND UNDERSTAND THE MEANING
AND RAMIFICATIONS OF THIS WAIVER, (ii) THIS WAIVER HAS BEEN REVIEWED BY THE
PARTIES AND THEIR COUNSEL AND IS A MATERIAL INDUCEMENT FOR ENTRY INTO THIS
AGREEMENT AND (iii) THIS WAIVER SHALL BE EFFECTIVE AS TO EACH OF SUCH
TRANSACTION DOCUMENTS AS IF FULLY INCORPORATED THEREIN.

 

Expenses. Except as otherwise provided in this Agreement, each of the parties
will bear and pay all other costs and expenses incurred by it or on its behalf
in connection with the transactions contemplated pursuant to this Agreement.

 

P.           Survival. Each of the representations and warranties set forth in
this Agreement shall survive the consummation of the transactions contemplated
hereby for a period of one year after the date hereof. Except as otherwise
provided herein, all covenants and agreements contained herein shall survive
until, by their respective terms, they are no longer operative.

 

[Signature Pages Follow]

 

24 

 

  

IN WITNESS WHEREOF, Company has caused this Subordinated Note Purchase Agreement
to be executed by its duly authorized representative as of the date first above
written.

  

  COMPANY:     WELLESLEY BANCORP, INC.         By:           Name: Thomas J.
Fontaine         Title: President and Chief Executive Officer

 

[Company Signature Page to Subordinated Note Purchase Agreement]

 

 

 

  

IN WITNESS WHEREOF, the Purchaser has caused this Subordinated Note Purchase
Agreement to be executed by its duly authorized representative as of the date
first above written.

 

  PURCHASER:     [INSERT PURCHASER’S NAME]         By:           Name: [●]      
  Title:

[●] 

        Address of Purchaser:         [●]1           Principal Amount of
Purchased Subordinated Note:     $[●]  

  

 

 

1 NTD: Insert domicile/headquarter address of Purchaser and mailing address for
delivery of notices (if different).

 

[Purchaser Signature Page to Subordinated Note Purchase Agreement]

 

 

 

  

EXHIBIT A

 

SUBORDINATED NOTE CERTIFICATE

 

WELLESLEY BANCORP, INC.

6.00% FIXED TO FLOATING Subordinated Note due December 30, 2025

 

THE INDEBTEDNESS EVIDENCED BY THIS SUBORDINATED NOTE IS SUBORDINATED AND JUNIOR
IN RIGHT OF PAYMENT TO THE CLAIMS OF CREDITORS (OTHER THAN CREDITORS OF EXISTING
SUBORDINATED DEBT) OF WELLESLEY BANCORP, INC. (“COMPANY”), AND DEPOSITORS OF
WELLESLEY BANK, INCLUDING OBLIGATIONS OF COMPANY TO ITS GENERAL AND SECURED
CREDITORS AND IS UNSECURED. IT IS INELIGIBLE AS COLLATERAL FOR ANY EXTENSION OF
CREDIT BY COMPANY OR ANY OF ITS SUBSIDIARIES. IN THE EVENT OF LIQUIDATION ALL
DEPOSITORS AND OTHER CREDITORS OF COMPANY SHALL BE ENTITLED TO BE PAID IN FULL
WITH SUCH INTEREST AS MAY BE PROVIDED BY LAW BEFORE ANY PAYMENT SHALL BE MADE ON
ACCOUNT OF PRINCIPAL OF OR INTEREST ON THIS SUBORDINATED NOTE. AFTER PAYMENT IN
FULL OF ALL SUMS OWING TO SUCH DEPOSITORS AND CREDITORS, THE HOLDER OF THIS
SUBORDINATED NOTE SHALL BE ENTITLED TO BE PAID FROM THE REMAINING ASSETS OF
COMPANY THE UNPAID PRINCIPAL AMOUNT OF THIS SUBORDINATED NOTE PLUS ACCRUED AND
UNPAID INTEREST THEREON BEFORE ANY PAYMENT OR OTHER DISTRIBUTION, WHETHER IN
CASH, PROPERTY OR OTHERWISE, SHALL BE MADE ON ACCOUNT OF ANY SHARES OF CAPITAL
STOCK OF COMPANY.

 

THIS SUBORDINATED NOTE WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN MINIMUM
DENOMINATIONS OF $1,000 AND MULTIPLES OF $1,000 IN EXCESS THEREOF. ANY ATTEMPTED
TRANSFER OF THIS SUBORDINATED NOTE IN A DENOMINATION OF LESS THAN $1,000 SHALL
BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER. ANY SUCH PURPORTED
TRANSFEREE SHALL BE DEEMED NOT TO BE THE HOLDER OF THIS SUBORDINATED NOTE FOR
ANY PURPOSE, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF PAYMENTS ON THIS
SUBORDINATED NOTE, AND SUCH PURPORTED TRANSFEREE SHALL BE DEEMED TO HAVE NO
INTEREST WHATSOEVER IN THIS SUBORDINATED NOTE.

 

THIS SUBORDINATED NOTE MAY BE SOLD ONLY IN COMPLIANCE WITH APPLICABLE FEDERAL
AND STATE SECURITIES LAWS. THIS SUBORDINATED NOTE HAS NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY OTHER
STATE SECURITIES LAWS OR ANY OTHER APPLICABLE SECURITIES LAWS. NEITHER THIS
SUBORDINATED NOTE NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED,
SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THIS
SUBORDINATED NOTE IS ISSUED SUBJECT TO THE RESTRICTIONS ON TRANSFER AND OTHER
PROVISIONS OF A SUBORDINATED NOTE PURCHASE AGREEMENT DATED DECEMBER 17, 2015,
BETWEEN COMPANY AND THE PURCHASERS REFERRED TO THEREIN (THE “PURCHASE
AGREEMENT”), A COPY OF WHICH IS ON FILE WITH COMPANY.

 

A-1-1 

 

 

CERTAIN ERISA CONSIDERATIONS:

 

THE HOLDER OF THIS SUBORDINATED NOTE, OR ANY INTEREST HEREIN, BY ITS ACCEPTANCE
HEREOF OR THEREOF AGREES, REPRESENTS AND WARRANTS THAT IT IS NOT AN EMPLOYEE
BENEFIT PLAN, INDIVIDUAL RETIREMENT ACCOUNT OR OTHER PLAN OR ARRANGEMENT SUBJECT
TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED
(“ERISA”), OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
“CODE”) (EACH A “PLAN”), OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE “PLAN
ASSETS” BY REASON OF ANY PLAN’S INVESTMENT IN THE ENTITY, AND NO PERSON
INVESTING “PLAN ASSETS” OF ANY PLAN MAY ACQUIRE OR HOLD THIS SUBORDINATED NOTE
OR ANY INTEREST HEREIN, UNLESS SUCH PURCHASER OR HOLDER IS ELIGIBLE FOR THE
EXEMPTIVE RELIEF AVAILABLE UNDER U.S. DEPARTMENT OF LABOR PROHIBITED TRANSACTION
CLASS EXEMPTION 96-23, 95-60, 91-38, 90-1 OR 84-14 OR ANOTHER APPLICABLE
EXEMPTION OR ITS PURCHASE AND HOLDING OF THIS SUBORDINATED NOTE, OR ANY INTEREST
HEREIN, ARE NOT PROHIBITED BY SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE
WITH RESPECT TO SUCH PURCHASE AND HOLDING. ANY PURCHASER OR HOLDER OF THIS
SUBORDINATED NOTE OR ANY INTEREST HEREIN WILL BE DEEMED TO HAVE REPRESENTED BY
ITS PURCHASE AND HOLDING THEREOF THAT EITHER: (i) IT IS NOT AN EMPLOYEE BENEFIT
PLAN OR OTHER PLAN TO WHICH TITLE I OF ERISA OR SECTION 4975 OF THE CODE IS
APPLICABLE, A TRUSTEE OR OTHER PERSON ACTING ON BEHALF OF ANY SUCH EMPLOYEE
BENEFIT PLAN OR PLAN, OR ANY OTHER PERSON OR ENTITY USING THE “PLAN ASSETS” OF
ANY SUCH EMPLOYEE BENEFIT PLAN OR PLAN TO FINANCE SUCH PURCHASE OR (ii) SUCH
PURCHASE OR HOLDING WILL NOT RESULT IN A PROHIBITED TRANSACTION UNDER SECTION
406 OF ERISA OR SECTION 4975 OF THE CODE FOR WHICH FULL EXEMPTIVE RELIEF IS NOT
AVAILABLE UNDER APPLICABLE STATUTORY OR ADMINISTRATIVE EXEMPTION.

 

ANY FIDUCIARY OF ANY PLAN WHO IS CONSIDERING THE ACQUISITION OF THIS
SUBORDINATED NOTE OR ANY INTEREST HEREIN SHOULD CONSULT WITH HIS OR HER LEGAL
COUNSEL PRIOR TO ACQUIRING THIS SUBORDINATED NOTE OR ANY INTEREST HEREIN.

 

A-1-2 

 

 

No. 2025-[●] CUSIP [●]

 

WELLESLEY BANCORP, INC.

 

THE INDEBTEDNESS EVIDENCED BY THIS SUBORDINATED NOTE IS NOT A DEPOSIT AND IS NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION (THE “FDIC”) OR ANY OTHER
GOVERNMENT AGENCY OR FUND.

 

6.00% FIXED TO FLOATING RATE SUBORDINATED NOTE DUE 2025

 

1.          Subordinated Notes. This Subordinated Note is one of an issue of
notes of Wellesley Bancorp, Inc., a Maryland corporation (the “Company”)
designated as the “6.00% Fixed to Floating Rate Subordinated Notes due 2025”
(the “Subordinated Notes”).

 

2.          Payment. Company, for value received, promises to pay to            
,       or        its registered assigns, the principal sum of            
Dollars (U.S.) ($            ), plus accrued but unpaid interest on December 30,
2025 (“Maturity Date”) and to pay interest thereon (i) from and including the
original issue date of the Subordinated Notes to but excluding December 30, 2020
or the earlier redemption date contemplated by Section 4(a) of this Subordinated
Note, at the rate of 6.00% per annum, computed on the basis of a 360-day year
consisting of twelve 30-day months and payable semi-annually in arrears on June
30 and December 30 of each year (each, a “Fixed Interest Payment Date”),
beginning June 30, 2016, and (ii) from and including December 30, 2020 to but
excluding the Maturity Date or the earlier redemption date contemplated by
Section 4(b) of this Subordinated Note, at the rate per annum, reset quarterly,
equal to LIBOR determined on the determination date of the applicable Interest
Period plus 435.5 basis points, computed on the basis of a 360-day year and the
actual number of days elapsed and payable quarterly in arrears on March 30, June
30, September 30 and December 30 of each year (each, a “Floating Interest
Payment Date”). An “Interest Payment Date” is either a Fixed Interest Payment
Date or a Floating Interest Payment Date, as applicable. “LIBOR” means the
3-month USD LIBOR, which will be the offered rate for 3-month deposits in U.S.
dollars, as that rate appears on the Reuters Screen LIBOR01 Page (or any
successor page thereto) as of 11:00 a.m., London time, as observed two London
banking days prior to the first day of the applicable floating rate interest
period. If 3-month USD LIBOR is not displayed as of such time with respect to
any applicable floating rate interest period, then LIBOR will be LIBOR in effect
for the floating rate interest period preceding the floating interest period for
which LIBOR is to be determined, or, with respect to the first floating rate
interest period, the most recent possible prior date. A London banking day is a
day on which commercial banks and foreign currency markets settle payments and
are open for general business in London. Any payment of principal of or interest
on this Subordinated Note that would otherwise become due and payable on a day
which is not a Business Day shall become due and payable on the next succeeding
Business Day, with the same force and effect as if made on the date for payment
of such principal or interest, and no interest will accrue in respect of such
payment for the period after such day. The term “Business Day” means any day
that is not a Saturday or Sunday and that is not a day on which banks in the
Commonwealth of Massachusetts are generally authorized or required by law or
executive order to be closed.

 

A-1-3 

 

 

3.          Subordination. The indebtedness of Company evidenced by this
Subordinated Note, including the principal and interest on this Subordinated
Note, shall be subordinate and junior in right of payment to the prior payment
in full of all existing claims of creditors and depositors of Company, whether
now outstanding or subsequently created, assumed, guaranteed or incurred
(collectively, “Senior Indebtedness”), which shall consist of principal of (and
premium, if any) and interest, if any, on: (a) all indebtedness and obligations
of, or guaranteed or assumed by, Company for money borrowed, whether or not
evidenced by bonds, debentures, securities, notes or other similar instruments,
and including, but not limited to, deposits of Company, and all obligations to
Company’s general and secured creditors; (b) any deferred obligations of Company
for the payment of the purchase price of property, goods, materials, assets or
services purchased or acquired (other than such obligations to trade creditors
incurred by Company in the ordinary course of business); (c) all obligations,
contingent or otherwise, of Company in respect of any letters of credit,
bankers’ acceptances, security purchase facilities and similar direct credit
substitutes; (d) any capital lease obligations of Company; (e) all obligations
of Company in respect of interest rate swap, cap or other agreements, interest
rate future or option contracts, currency swap agreements, currency future or
option contracts, commodity contracts and other similar arrangements or
derivative products; (f) any obligation of Company to its general creditors, as
defined for purposes of the capital adequacy regulations of the Board of
Governors of the Federal Reserve System (the “Federal Reserve”) applicable to
Company, as the same may be amended or modified from time to time; (g) all
obligations that are similar to those in clauses (a) through (f) of other
persons for the payment of which Company is responsible or liable as obligor,
guarantor or otherwise; and (h) all obligations of the types referred to in
clauses (a) through (g) of other persons secured by a lien on any property or
asset of Company; and (i) in the case of (a) through (h) above, all amendments,
renewals, extensions, modifications and refunding’s of such indebtedness and
obligations; except “Senior Indebtedness” does not include (i) the Subordinated
Notes, (ii) any obligation that by its terms expressly is junior to, or ranks
equally in right of payment with, the Subordinated Notes, or (iii) any
indebtedness between Company and any of its subsidiaries or Affiliates. This
Subordinated Note is not secured by any assets of Company.

 

In the event of liquidation of Company, all holders of Senior Indebtedness shall
be entitled to be paid in full with such interest as may be provided by law
before any payment shall be made on account of principal of or interest on this
Subordinated Note. Additionally, in the event of any insolvency, dissolution,
assignment for the benefit of creditors or any liquidation or winding up of or
relating to Company, whether voluntary or involuntary, holders of Senior
Indebtedness shall be entitled to be paid in full before any payment shall be
made on account of the principal of or interest on the Subordinated Notes,
including this Subordinated Note. In the event of any such proceeding, after
payment in full of all sums owing with respect to the Senior Indebtedness, the
registered holders of the Subordinated Notes from time to time (each a
“Noteholder” and, collectively, the “Noteholders”), together with the holders of
any obligations of Company ranking on a parity with the Subordinated Notes,
shall be entitled to be paid from the remaining assets of Company the unpaid
principal thereof, and the unpaid interest thereon before any payment or other
distribution, whether in cash, property or otherwise, shall be made on account
of any capital stock.

 

A-1-4 

 

 

If there shall have occurred and be continuing (a) a default in any payment with
respect to any Senior Indebtedness or (b) an event of default with respect to
any Senior Indebtedness as a result of which the maturity thereof is
accelerated, unless and until such payment default or event of default shall
have been cured or waived or shall have ceased to exist, no payments shall be
made by Company with respect to the Subordinated Notes. The provisions of this
paragraph shall not apply to any payment with respect to which the immediately
preceding paragraph of this Section 3 would be applicable.

 

Nothing herein shall act to prohibit, limit or impede Company from issuing
additional debt of Company having the same rank as the Subordinated Notes or
which may be junior or senior in rank to the Subordinated Notes. Each
Noteholder, by its acceptance hereof, agrees to and shall be bound by the
provisions of this Section 3. Each Noteholder, by its acceptance hereof, further
acknowledges and agrees that the foregoing subordination provisions are, and are
intended to be, an inducement and a consideration for each holder of any Senior
Indebtedness, whether such Senior Indebtedness was created or acquired before or
after the issuance of the Subordinated Notes, to acquire and continue to hold,
or to continue to hold, such Senior Indebtedness, and such holder of Senior
Indebtedness shall be deemed conclusively to have relied on such subordination
provisions in acquiring and continuing to hold or in continuing to hold such
Senior Indebtedness.

 

4.             Redemption.

 

(a)          Redemption Prior to Fifth Anniversary. This Subordinated Note shall
not be redeemable by Company in whole or in part prior to the fifth anniversary
of the date upon which this Subordinated Note was originally issued (the “Issue
Date”), except in the event: (i) this Subordinated Note no longer qualifies as
“Tier 2” Capital (as defined by the Federal Reserve) as a result of a change in
interpretation or application of law or regulation by any judicial, legislative
or regulatory authority that becomes effective after the date of issuance of
this Subordinated Note (“Tier 2 Capital Event”); (ii) of a Tax Event (as defined
below); or (iii) Company becomes required to register as an investment company
pursuant to the Investment Company Act of 1940, as amended (and “Investment
Company Event”). Upon the occurrence of a Tier 2 Capital Event, a Tax Event or
an Investment Company Event, subject to Section 4(f), Company may redeem this
Subordinated Note in whole at any time, or in part from time to time, upon
giving not less than 10 days’ notice to the holder of this Subordinated Note at
an amount equal to 100% of the outstanding principal amount being redeemed plus
accrued but unpaid interest to, but excluding, the redemption date. “Tax Event”
means the receipt by Company of an opinion of counsel to Company that as a
result of any amendment to, or change (including any final and adopted (or
enacted) prospective change) in, the laws (or any regulations thereunder) of the
United States or any political subdivision or taxing authority thereof or
therein, or as a result of any official administrative pronouncement or judicial
decision interpreting or applying such laws or regulations, there exists a
material risk that interest payable by Company on the Subordinated Notes is not,
or within 120 days after the receipt of such opinion will not be, deductible by
Company, in whole or in part, for United States federal income tax purposes.

 

(b)          Redemption on or after Fifth Anniversary. On or after the fifth
anniversary of the Issue Date, subject to Section 4(f), this Subordinated Note
shall be redeemable at the option of and by Company, in whole at any time or in
part upon any Interest Payment Date, at an amount equal to 100% of the
outstanding principal amount being redeemed plus accrued but unpaid interest, to
but excluding the redemption date, but in all cases in a principal amount with
integral multiples of $1,000.

 

A-1-5 

 

 

(c)          Partial Redemption. If less than the then outstanding principal
amount of this Subordinated Note is redeemed, (i) a new Subordinated Note shall
be issued representing the unredeemed portion without charge to the holder
thereof and (ii) such redemption shall be effected on a pro rata basis as to the
Noteholders. For purposes of clarity, upon a partial redemption, a like
percentage of the principal amount of every Subordinated Note held by every
Noteholder shall be redeemed.

 

(d)          No Redemption at Option of Noteholder. This Subordinated Note is
not subject to redemption at the option of the holder of this Subordinated Note.

 

(e)          Effectiveness of Redemption. If notice of redemption has been duly
given and notwithstanding that this Subordinated Note has been called for
redemption but has not yet been surrendered for cancellation, on and after the
date fixed for redemption interest shall cease to accrue on this Subordinated
Note, this Subordinated Note shall no longer be deemed outstanding and all
rights with respect to this Subordinated Note shall forthwith on such date fixed
for redemption cease and terminate unless Company shall default in the payment
of the redemption price, except only the right of the holder hereof to receive
the amount payable on such redemption, without interest.

 

(f)          Regulatory Approvals. Any such redemption shall be subject to
receipt of any and all required federal and state regulatory approvals,
including, but not limited to, the consent of the Federal Reserve. In the case
of any redemption of this Subordinated Note pursuant to paragraphs (b) and (c)
of this Section 4, Company will give the holder hereof notice of redemption,
which notice shall indicate the aggregate principal amount of Subordinated Notes
to be redeemed, not less than 30 nor more than 45 calendar days prior to the
redemption date.

 

(g)         Purchase and Resale of the Subordinated Notes. Subject to any
required federal and state regulatory approvals and the provisions of this
Subordinated Note, Company shall have the right to purchase any of the
Subordinated Notes at any time in the open market, through private transactions
or otherwise. If Company purchases any Subordinated Notes, it may, in its
discretion, hold, resell or cancel any of the purchased Subordinated Notes.

 

5.            Events of Default; Acceleration; Compliance Certificate. Each of
the following events shall constitute an “Event of Default”:

 

(a)          the entry of a decree or order for relief in respect of Company by
a court having jurisdiction in the premises in an involuntary case or proceeding
under any applicable bankruptcy, insolvency, or reorganization law, now or
hereafter in effect of the United States or any political subdivision thereof,
and such decree or order will have continued unstayed and in effect for a period
of 60 consecutive days;

 

(b)          the commencement by Company of a voluntary case under any
applicable bankruptcy, insolvency or reorganization law, now or hereafter in
effect of the United States or any political subdivision thereof, or the consent
by Company to the entry of a decree or order for relief in an involuntary case
or proceeding under any such law;

 

A-1-6 

 

 

(c)          the failure of Company to pay any installment of interest on any of
the Subordinated Notes as and when the same will become due and payable, and the
continuation of such failure for a period of 30 days;

 

(d)          the failure of Company to pay all or any part of the principal of
any of the Subordinated Notes as and when the same will become due and payable;

 

(e)          the failure of Company to perform any other covenant or agreement
on the part of Company contained in the Subordinated Notes or the Purchase
Agreement, and the continuation of such failure for a period of 60 days after
the date on which notice specifying such failure, stating that such notice is a
“Notice of Default” hereunder and demanding that Company remedy the same, will
have been given, in the manner set forth in Section 21, to Company by the
Noteholders of at least 25% in aggregate principal amount of the Subordinated
Notes at the time outstanding; or the default by Company under any bond,
debenture, note or other evidence of indebtedness for money borrowed by Company
having an aggregate principal amount outstanding of at least $30,000,000,
whether such indebtedness now exists or is created or incurred in the future,
which default (i) constitutes a failure to pay any portion of the principal of
such indebtedness when due and payable after the expiration of any applicable
grace period or (ii) results in such indebtedness becoming due or being declared
due and payable prior to the date on which it otherwise would have become due
and payable without, in the case of clause (i), such indebtedness having been
discharged or, in the case of clause (ii), without such indebtedness having been
discharged or such acceleration having been rescinded or annulled.

 

Unless the principal of this Subordinated Note already shall have become due and
payable, if an Event of Default set forth in subsections (a) or (b) above shall
have occurred and be continuing, the holder of this Subordinated Note, by notice
in writing to Company, may declare the principal amount of this Subordinated
Note to be due and payable immediately and, upon any such declaration the same
shall become and shall be immediately due and payable. Company waives demand,
presentment for payment, notice of nonpayment, notice of protest, and all other
notices. Company, within 45 calendar days after the receipt of written notice
from any Noteholder of the occurrence of an Event of Default with respect to
this Subordinated Note, shall mail to all Noteholders, at their addresses shown
on the Security Register (as defined in Section 13 below), such written notice
of Event of Default, unless such Event of Default shall have been cured or
waived before the giving of such notice as certified by Company in writing.

 

6.          Failure to Make Payments. In the event of failure by Company to make
any required payment of principal or interest on this Subordinated Note (and, in
the case of payment of interest, such failure to pay shall have continued for 30
calendar days), Company will, upon demand of the holder of this Subordinated
Note, pay to the holder of this Subordinated Note the amount then due and
payable on this Subordinated Note for principal and interest (without
acceleration of the Note in any manner), with interest on the overdue principal
and interest at the rate borne by this Subordinated Note, to the extent
permitted by applicable law. If Company fails to pay such amount upon such
demand, the holder of this Subordinated Note may, among other things, institute
a judicial proceeding for the collection of the sums so due and unpaid, may
prosecute such proceeding to judgment or final decree and may enforce the same
against Company and collect the amounts adjudged or decreed to be payable in the
manner provided by law out of the property of Company.

 

A-1-7 

 

 

Upon the occurrence of a failure by Company to make any required payment of
principal or interest on this Subordinated Note, or an Event of Default until
such Event of Default is cured by Company, Company shall not: (a) declare or pay
any dividends or distributions on, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any of Company’s capital stock; (b) make
any payment of principal or interest or premium, if any, on or repay, repurchase
or redeem any debt securities of Company that rank equal with or junior to the
Subordinated Notes; or (c) make any payments under any guarantee that ranks
equal with or junior to the Subordinated Notes, other than (i) any dividends or
distributions in shares of, or options, warrants or rights to subscribe for or
purchase shares of, any class of Company’s common stock; (ii) any declaration of
a dividend in connection with the implementation of a shareholders’ rights plan,
or the issuance of stock under any such plan in the future, or the redemption or
repurchase of any such rights pursuant thereto; (iii) as a result of a
reclassification of Company’s capital stock or the exchange or conversion of one
class or series of Company’s capital stock for another class or series of
Company’s capital stock; (iv) the purchase of fractional interests in shares of
Company’s capital stock pursuant to the conversion or exchange provisions of
such capital stock or the security being converted or exchanged; or (v)
purchases of any class of Company’s common stock related to the issuance of
common stock or rights under any benefit plans for Company’s directors, officers
or employees or any of Company’s dividend reinvestment plans.

 

7.           Affirmative Covenants of Company.

 

(a)          Payment of Principal and Interest. Company covenants and agrees for
the benefit of the holder of this Subordinated Note that it will duly and
punctually pay the principal of, and interest on, this Subordinated Note, in
accordance with the terms hereof. Principal and interest will be considered paid
on the date due if Company or a subsidiary thereof, holds as of 11:00 a.m.,
Massachusetts time, on any Interest Payment Date, an amount in immediately
available funds provided by Company that is designated for and sufficient to pay
all principal and interest then due.

 

(b)          Maintenance of Office. Company will maintain an office or agency in
Wellesley, Massachusetts, where Subordinated Notes may be surrendered for
registration of transfer or for exchange and where notices and demands to or
upon Company in respect of the Subordinated Notes may be served.

 

Company may also from time to time designate one or more other offices or
agencies where the Subordinated Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations; provided
that no such designation or rescission will in any manner relieve Company of its
obligation to maintain an office or agency in Wellesley, Massachusetts. Company
will give prompt written notice to the Noteholders of any such designation or
rescission and of any change in the location of any such other office or agency.

 

(c)          Corporate Existence. Company will do or cause to be done all things
necessary to preserve and keep in full force and effect: (i) the corporate
existence of Company; (ii) the existence (corporate or other) of each subsidiary
of Company that is a “significant subsidiary” as defined in Rule 1-02 of
Regulation S-X promulgated by the U.S. Securities and Exchange Commission (as
such rule is in effect on the date hereof (each, a “Significant Subsidiary”);
and (iii) the rights (charter and statutory), licenses and franchises of Company
and each of its Significant Subsidiaries; provided, however, that Company will
not be required to preserve the existence (corporate or other) of any of its
Significant Subsidiaries or any such right, license or franchise of Company or
any of its Significant Subsidiaries if the Board of Directors of Company
determines that the preservation thereof is no longer desirable in the conduct
of the business of Company and its Significant Subsidiaries taken as a whole and
that the loss thereof will not be disadvantageous in any material respect to the
Noteholders.

 

A-1-8 

 

 

(d)          Maintenance of Properties. Company will, and will cause each
Significant Subsidiary to, cause all its properties used or useful in the
conduct of its business to be maintained and kept in good condition, repair and
working order and supplied with all necessary equipment and will cause to be
made all necessary repairs, renewals, replacements, betterments and improvements
thereof, all as in the judgment of Company may be necessary so that the business
carried on in connection therewith may be properly and advantageously conducted
at all times; provided, however, that nothing in this Section will prevent
Company or any Significant Subsidiary from discontinuing the operation and
maintenance of any of their respective properties if such discontinuance is, in
the judgment of the Board of Directors of Company or of any Significant
Subsidiary, as the case may be desirable in the conduct of its business.

 

(e)          Waiver of Certain Covenants. Company may omit in any particular
instance to comply with any term, provision or condition set forth in
Section 7(a) or Section 7(b) above, with respect to this Subordinated Note if
before the time for such compliance the Noteholders of at least a majority in
principal amount of the outstanding Subordinated Notes, by act of such
Noteholders, either will waive such compliance in such instance or generally
will have waived compliance with such term, provision or condition, but no such
waiver will extend to or affect such term, provision or condition except to the
extent so expressly waived, and, until such waiver will become effective, the
obligations of Company in respect of any such term, provision or condition will
remain in full force and effect.

 

(f)          Company Statement as to Compliance. Company will deliver to the
Noteholders, within 120 days after the end of each fiscal year, an Officer’s
Certificate covering the preceding calendar year, stating whether or not, to the
best of his or her knowledge, Company is in default in the performance and
observance of any of the terms, provisions and conditions of this Subordinated
Note (without regard to notice requirements or periods of grace) and if Company
will be in default, specifying all such defaults and the nature and status
thereof of which he or she may have knowledge.

 

(g)          Tier 2 Capital. If all or any portion of the Subordinated Notes
ceases to be deemed to be Tier 2 Capital, other than due to the limitation
imposed on the capital treatment of subordinated debt during the five years
immediately preceding the Maturity Date of the Subordinated Notes, Company will
immediately notify the Noteholders, and thereafter Company shall request,
subject to the terms hereof, that the Noteholders execute and deliver all
agreements as reasonably necessary in order to restructure the applicable
portions of the obligations evidenced by the Subordinated Notes to qualify as
Tier 2 Capital.

 

8.           Merger or Sale of Assets. Company shall not merge into another
entity or convey, transfer or lease substantially all of its properties and
assets to any person, unless:

 

A-1-9 

 

 

(a)          the continuing entity into which Company is merged or the person
which acquires by conveyance or transfer or which leases substantially all of
the properties and assets of Company shall be a corporation, association or
other legal entity organized and existing under the laws of the United States of
America, any State thereof or the District of Columbia and expressly assumes the
due and punctual payment of the principal of and any premium and interest on the
Subordinated Notes according to their terms, and the due and punctual
performance of all covenants and conditions hereof on the part of Company to be
performed or observed; and

 

(b)          immediately after giving effect to such transaction, no Event of
Default (as defined below), and no event which, after notice or lapse of time or
both, would become an Event of Default, shall have happened and be continuing.

 

9.            Denominations. The Subordinated Notes are issuable only in
registered form without interest coupons in minimum denominations of $1,000 and
integral multiples of $1,000 in excess thereof.

 

10.          Charges and Transfer Taxes. No service charge will be made for any
registration of transfer or exchange of this Subordinated Note, or any
redemption or repayment of this Subordinated Note, or any conversion or exchange
of this Subordinated Note for other types of securities or property, but Company
may require payment of a sum sufficient to pay all taxes, assessments or other
governmental charges that may be imposed in connection with the transfer or
exchange of this Subordinated Note from the Noteholder requesting such transfer
or exchange.

 

11.         Payment Procedures. Payment of the principal and interest payable on
the Maturity Date will be made by check, or by wire transfer in immediately
available funds to a bank account in the United States designated by the
registered holder of this Subordinated Note if such Noteholder shall have
previously provided wire instructions to Company, upon presentation and
surrender of this Subordinated Note at the Payment Office (as defined in Section
21 below) or at such other place or places as Company shall designate by notice
to the registered Noteholders as the Payment Office, provided that this
Subordinated Note is presented to Company in time for Company to make such
payments in such funds in accordance with its normal procedures. Payments of
interest (other than interest payable on the Maturity Date) shall be made by
wire transfer in immediately available funds or check mailed to the registered
holder of this Subordinated Note, as such person’s address appears on the
Security Register (as defined below). Interest payable on any Interest Payment
Date shall be payable to the Noteholder in whose name this Subordinated Note is
registered at the close of business on the fifteenth calendar day prior to the
applicable Interest Payment Date, without regard to whether such date is a
Business Day (such date being referred to herein as the “Regular Record Date”),
except that interest not paid on the Interest Payment Date, if any, will be paid
to the holder in whose name this Subordinated Note is registered at the close of
business on a special record date fixed by Company (a “Special Record Date”),
notice of which shall be given to the holder of this Subordinated Note not less
than 10 calendar days prior to such Special Record Date. (The Regular Record
Date and Special Record Date are referred to herein collectively as the “Record
Dates”). To the extent permitted by applicable law, interest shall accrue, at
the rate at which interest accrues on the principal of this Subordinated Note,
on any amount of principal or interest on this Subordinated Note not paid when
due. All payments on this Subordinated Note shall be applied first against costs
and expenses of the holder of this Subordinated Note; then against interest due
hereunder; and then against principal due hereunder. The holder of this
Subordinated Note acknowledges and agrees that the payment of all or any portion
of the outstanding principal amount of this Subordinated Note and all interest
hereon shall be pari passu in right of payment and in all other respects to the
other Subordinated Notes. In the event that the holder of this Subordinated Note
receives payments in excess of its pro rata share of Company’s payments to the
holders of all of the Subordinated Notes, then the holder of this Subordinated
Note shall hold in trust all such excess payments for the benefit of the holders
of the other Subordinated Notes and shall pay such amounts held in trust to such
other holders upon demand by such holders.

 

A-1-10 

 

 

12.         Form of Payment. Payments of principal and interest on this
Subordinated Note shall be made in such coin or currency of the United States of
America as at the time of payment shall be legal tender for the payment of
public and private debts.

 

13.         Registration of Transfer, Security Register. Except as otherwise
provided herein, this Subordinated Note is transferable in whole or in part, and
may be exchanged for a like aggregate principal amount of Subordinated Notes of
other authorized denominations, by the holder of this Subordinated Note in
person, or by his attorney duly authorized in writing, at the Payment Office.
Company shall maintain a register providing for the registration of the
Subordinated Notes and any exchange or transfer thereof (the “Security
Register”). Upon surrender or presentation of this Subordinated Note for
exchange or registration of transfer, Company shall execute and deliver in
exchange therefor a Subordinated Note or Subordinated Notes of like aggregate
principal amount, each in a minimum denomination of $1,000 or any amount in
excess thereof which is an integral multiple of $1,000 (and, in the absence of
an opinion of counsel satisfactory to Company to the contrary, bearing the
restrictive legend(s) set forth hereinabove) and that is or are registered in
such name or names requested by the Noteholder. Any Subordinated Note presented
or surrendered for registration of transfer or for exchange shall be duly
endorsed and accompanied by a written instrument of transfer in such form as is
attached hereto and incorporated herein, duly executed by the holder of this
Subordinated Note or his attorney duly authorized in writing, with such tax
identification number or other information for each person in whose name a
Subordinated Note is to be issued, and accompanied by evidence of compliance
with any restrictive legend(s) appearing on such Subordinated Note or
Subordinated Notes as Company may reasonably request to comply with applicable
law. No exchange or registration of transfer of this Subordinated Note shall be
made on or after the fifteenth day immediately preceding the Maturity Date. This
Subordinated Note is subject to the restrictions on transfer of the Purchase
Agreement between Company and the Purchasers identified therein, who were the
original holders of the Subordinated Notes, a copy of which is on file with
Company.

 

14.         Priority. The Subordinated Notes rank pari passu among themselves
and pari passu, in the event of any insolvency proceeding, dissolution,
assignment for the benefit of creditors, reorganization, restructuring of debt,
marshaling of assets and liabilities or similar proceeding or any liquidation or
winding up of Company, with all other present or future unsecured subordinated
debt obligations of Company, except any unsecured subordinated debt that,
pursuant to its express terms, is senior or subordinate in right of payment to
the Subordinated Notes.

 

A-1-11 

 

 

15.         Ownership. Prior to due presentment of this Subordinated Note for
registration of transfer, Company may treat the holder in whose name this
Subordinated Note is registered in the Security Register as the absolute owner
of this Subordinated Note for receiving payments of principal and interest on
this Subordinated Note and for all other purposes whatsoever, whether or not
this Subordinated Note be overdue, and Company shall not be affected by any
notice to the contrary.

 

16.         Waiver and Consent. Any consent or waiver given by the holder of
this Subordinated Note shall be conclusive and binding upon such holder and upon
all future holders of this Subordinated Note and of any Subordinated Note issued
upon the registration of transfer hereof or in exchange therefor or in lieu
hereof, whether or not notation of such consent or waiver is made upon this
Subordinated Note. This Subordinated Note may be also amended or waived pursuant
to, and in accordance with, the provisions of Section VIII.C of the Purchase
Agreement. No delay or omission of the holder of this Subordinated Note to
exercise any right or remedy accruing upon any Event of Default shall impair
such right or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein. Any insured depository institution which shall be a holder
of this Subordinated Note or which otherwise shall have any beneficial ownership
interest in this Subordinated Note shall, by its acceptance of such Subordinated
Note (or beneficial interest therein), be deemed to have waived any right of
offset with respect to the indebtedness evidenced thereby.

 

17.         Absolute and Unconditional Obligation of Company. No provisions of
this Subordinated Note shall alter or impair the obligation of Company, which is
absolute and unconditional, to pay the principal and interest on this
Subordinated Note at the times, places and rate, and in the coin or currency,
herein prescribed.

 

(a)          No delay or omission of the holder of this Subordinated Note to
exercise any right or remedy accruing upon any Event of Default shall impair
such right or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein.

 

(b)          Any insured depository institution which shall be a holder of this
Subordinated Note or which otherwise shall have any beneficial ownership
interest in this Subordinated Note shall, by its acceptance of such Note (or
beneficial interest therein), be deemed to have waived any right of offset with
respect to the indebtedness evidenced thereby.

 

18.         No Sinking Fund; Convertibility. This Subordinated Note is not
entitled to the benefit of any sinking fund. This Subordinated Note is not
convertible into or exchangeable for any of the equity securities, other
securities or assets of Company or any subsidiary.

 

19.         Successors and Assigns. This Note shall be binding upon Company and
inure to the benefit of the Noteholder and its respective successors and
permitted assigns. The Noteholder may assign all, or any part of, or any
interest in, the Noteholder’s rights and benefits hereunder only to the extent
and in the manner permitted in the Purchase Agreement. To the extent of any such
assignment, such assignee shall have the same rights and benefits against
Company and shall agree to be bound by and to comply with the terms and
conditions of the Purchase Agreement as it would have had if it were the
Noteholder hereunder.

 

A-1-12 

 

 

20.         No Recourse Against Others. No recourse under or upon any
obligation, covenant or agreement contained in this Subordinated Note, or for
any claim based thereon or otherwise in respect thereof, will be had against any
past, present or future shareholder, employee, officer, or director, as such, of
Company or of any predecessor or successor, either directly or through Company
or any predecessor or successor, under any rate of law, statute or
constitutional provision or by the enforcement of any assessment or by any legal
or equitable proceeding or otherwise, all such liability being expressly waived
and released by the acceptance of this Subordinated Note by the holder hereof
and as part of the consideration for the issuance of this Subordinated Note.

 

21.         Notices. All notices to Company under this Subordinated Note shall
be in writing and addressed to Company at 40 Central Street, Wellesley,
Massachusetts 02482, Attn: Thomas J. Fontaine, President and Chief Executive
Officer, or to such other address as Company may notify to the holder of this
Subordinated Note (the “Payment Office”). All notices to the Noteholders shall
be in writing and sent by first-class mail to each Noteholder at his or its
address as set forth in the Security Register.

 

22.         Further Issues. Company may, without the consent of the holders of
the Subordinated Notes, create and issue additional notes having the same terms
and conditions of the Subordinated Notes (except for the Issue Date) so that
such further notes shall be consolidated and form a single series with the
Subordinated Notes.

 

23.         Governing Law. THIS SUBORDINATED NOTE WILL BE DEEMED TO BE A
CONTRACT MADE UNDER THE LAWS OF THE STATE OF NEW YORK AND WILL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT
GIVING EFFECT TO ITS LAWS OR PRINCIPLES OF CONFLICT OF LAWS THAT WOULD RESULT IN
THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION. THIS SUBORDINATED NOTE IS
INTENDED TO MEET THE CRITERIA FOR QUALIFICATION OF THE OUTSTANDING PRINCIPAL AS
TIER 2 CAPITAL UNDER THE REGULATORY GUIDELINES OF THE FEDERAL RESERVE, AND THE
TERMS HEREOF SHALL BE INTERPRETED IN A MANNER TO SATISFY SUCH INTENT.

 

[Signature Page Follows]

 

A-1-13 

 

 

IN WITNESS WHEREOF, the undersigned has caused this Subordinated Note to be duly
executed.

 

Dated: December ____, 2015

 

  WELLESLEY BANCORP, INC.           By:       Name: Thomas J. Fontaine    
Title: President and Chief Executive Officer

 

A-1-14 

 

 

ASSIGNMENT FORM

 

To assign this Subordinated Note, fill in the form below: (I) or (we) assign and
transfer this Subordinated Note to:

 

 

(Print or type assignee’s name, address and zip code)

 

 

(Insert assignee’s social security or tax I.D. No.)

 

and irrevocably appoint _______________________ agent to transfer this
Subordinated Note on the books of Company. The agent may substitute another to
act for him.

 

Date:     Your signature: ___________________________________       (Sign
exactly as your name appears on the face of this Subordinated Note)            
  Tax Identification No: ______________________________

 

Signature Guarantee:
_______________________________________________________________________________

(Signatures must be guaranteed by an eligible guarantor institution (banks,
stockbroker’s, savings and loan associations and credit unions with membership
in an approved signature guarantee medallion program), pursuant to Exchange Act
Rule 17Ad-15).

 

The undersigned certifies that it [is / is not] an Affiliate of Company and
that, to its knowledge, the proposed transferee [is / is not] an Affiliate of
Company.

 

In connection with any transfer or exchange of this Subordinated Note occurring
prior to the date that is one year after the later of the date of original
issuance of this Subordinated Note and the last date, if any, on which this
Subordinated Note was owned by Company or any Affiliate of Company, the
undersigned confirms that this Subordinated Note is being:

 

CHECK ONE BOX BELOW:

 

¨ (1) acquired for the undersigned’s own account, without transfer;       ¨ (2)
transferred to Company;       ¨ (3) transferred in accordance and in compliance
with Rule 144A under the Securities Act of 1933, as amended (the “Securities
Act”);       ¨ (4) transferred under an effective registration statement under
the Securities Act;       ¨ (5) transferred in accordance with and in compliance
with Regulation S under the Securities Act;

 

 

 

 

¨ (6) transferred to an institutional “accredited investor” (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act) or an “accredited investor”
(as defined in Rule 501(a)(4) under the Securities Act), that has furnished a
signed letter containing certain representation’s and agreements; or       ¨ (7)
transferred in accordance with another available exemption from the registration
requirements of the Securities Act of 1933, as amended.

 

Unless one of the boxes is checked, Company will refuse to register this
Subordinated Note in the name of any person other than the registered holder
thereof; provided, however, that if box (5), (6) or (7) is checked, Company may
require, prior to registering any such transfer of this Subordinated Note, in
its sole discretion, such legal opinions, certifications and other information
as Company may reasonably request to confirm that such transfer is being made
pursuant to an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act such as the exemption provided
by Rule 144 under such Act.

 

  Signature:  

 

Signature
Guarantee:_______________________________________________________________________________

(Signatures must be guaranteed by an eligible guarantor institution (banks,
stockbroker’s, savings and loan associations and credit unions with membership
in an approved signature guarantee medallion program), pursuant to Exchange Act
Rule 17Ad-l5).

 

TO BE COMPLETED BY PURCHASER IF BOX (1) OR (3) ABOVE IS CHECKED.

 

The undersigned represents and warrants that it is purchasing this Subordinated
Note for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a “qualified
institutional buyer” within the meaning of Rule 144A under the Securities Act of
1933, as amended, and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding
Company as the undersigned has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the transferor is
relying upon the undersigned’s foregoing representations in order to claim the
exemption from registration provided by Rule 144A.

 

Date:     Signature:  

 

2 

 

 

EXHIBIT B

 

OPINION OF COUNSEL

 

(1)The Company is validly existing and is in good standing under the laws of the
State of Maryland and is duly qualified or licensed to do business and is in
good standing in the Commonwealth of Massachusetts.

 

(2)The Bank is validly existing and is in good standing under the laws of the
Commonwealth of Massachusetts.

 

(3)The Company has the corporate power and authority to conduct its business as
described in the Company’s SEC Reports and to enter into, deliver and perform
its obligations under the Transaction Documents to which it is a party and to
consummate the transactions contemplated by the Agreement.

 

(4)The Agreement has been duly and validly authorized, executed and delivered by
Company.

 

(5)The Subordinated Notes have been duly and validly authorized by the Company
and when issued and delivered to and paid for by the Purchasers in accordance
with the terms of the Agreement, will have been duly executed, authenticated,
issued and delivered and will constitute legal, valid and binding obligations of
the Company, and enforceable against the Company in accordance with their terms,
except that the enforcement thereof may be subject to (i) bankruptcy,
insolvency, reorganization, receivership, moratorium, fraudulent conveyance,
fraudulent transfer or other similar laws now or hereafter in effect relating to
creditors’ rights generally and (ii) general principles of equity (whether
applied by a court of law or equity) and the discretion of the court before
which any proceeding therefor may be brought.

 

(6)Assuming the accuracy of the representations of each of the Purchasers set
forth in the Agreement, the Subordinated Notes to be issued and sold by the
Company to the Purchasers pursuant to the Agreement will be issued in a
transaction exempt from the registration requirements of the Securities Act.