CERTAIN TRANSACTIONS WITH DIRECTORS/TRUSTEES AND EXECUTIVE OFFICERS

We do not make loans to our executive officers or employees. However, we do make loans to our trustees/directors. These loans bear interest at the same rate as loans offered to non-trustee/director borrowers and have the same underwriting terms that apply to non-trustee/director borrowers.

We retain the law firm of Tashjian, Simsarian & Wickstrom. Mr. James Tashjian, a director of Westborough Financial Services and Westborough Bank, and a trustee of Westborough Bancorp, MHC, has been a partner of Tashjian, Simsarian & Wickstrom since 1995. For 1998, the firm received approximately $75 thousand from borrowers of Westborough Savings to review loan documentation.

PROPOSED PURCHASES OF COMMON STOCK BY MANAGEMENT

The following table presents, for each of our trustees and executive officers, the amount of stock they wish to purchase in the offering. We have assumed that a sufficient number of shares will be available to satisfy their subscriptions. The amounts include shares that may be purchased through individual retirement accounts and by associates of the trustees and executive officers. Collectively our trustees and executive officers expect to purchase a total of shares, or % of shares we sell in the offering (assuming the sale of 700,000 shares of common stock).

                                                                                       NUMBER
NAME                                                                       AMOUNT     OF SHARES
------------------------------------------------------------------------  ---------  -----------
Directors:

Walter A. Kinell, Jr.
Nelson P. Ball
Edward S. Bilzerian
David E. Carlstrom
John L. Casagrande
William W. Cotting, Jr.
Robert G. Daniel
Earl H. Hutt
Robert A. Klugman
Roger B. Leland
Joseph F. MacDonough                                                      $  50,000       5,000
Paul F. McGrath
Charlotte C. Spinney
Phyliss A. Stone
James E. Tashjian
Daniel G. Tear

Executive Officers who are not Directors:

Vickie A. Bouvier
Alexander P. Tautkas
Margaret I. Duquette

THE REORGANIZATION AND THE OFFERING

THE BOARD OF TRUSTEES OF WESTBOROUGH SAVINGS HAS ADOPTED AND THE COMMISSIONER OF THE DIVISION OF BANKS OF THE COMMONWEALTH OF MASSACHUSETTS HAS APPROVED THE PLAN OF REORGANIZATION, SUBJECT TO APPROVAL BY WESTBOROUGH SAVINGS' CORPORATORS OF THE PLAN AND THE SATISFACTION OF CERTAIN OTHER CONDITIONS.

APPROVAL BY THE COMMISSIONER DOES NOT CONSTITUTE A RECOMMENDATION OR

ENDORSEMENT OF THE REORGANIZATION BY THE COMMISSIONER.

GENERAL

On March 15, 1999, Westborough Savings' Board of Trustees unanimously adopted the plan of reorganization pursuant to which Westborough Savings Bank will reorganize into a mutual holding company structure. This reorganization includes the formation of an intermediate stock holding company, Westborough Financial Services and the offering by Westborough Financial Services of a minority of its shares to depositors of Westborough Savings and certain other persons. Under the terms of the plan of reorganization, Westborough Financial Services will own The Westborough Bank, and Westborough Bancorp, MHC will own more than half of Westborough Financial Services. The reorganization will be effected as described under "--Tax Aspects" or in any other manner that is permitted by the Division and the FDIC and is consistent with the intent of the plan of reorganization. See "Description of Our Structure after the Reorganization" in the Summary section of this prospectus for a chart which reflects our structure after the reorganization.

Westborough Financial Services and Westborough Bancorp, MHC have requested approval from the Federal Reserve Bank of Boston to become bank holding companies and to acquire Westborough Bank. The plan of reorganization was approved by the Division, and Westborough Savings has received a notice of intent not to object to the plan of reorganization from the FDIC, subject to, among other things, approval of the plan of reorganization by the corporators of Westborough Savings.

Westborough Savings has called a special meeting for this purpose which will be held on , 1999. The plan of reorganization must be approved by an affirmative vote of at least a majority of Westborough Savings' corporators and a majority of Westborough Savings' independent corporators, who must constitute not less than 60% of all corporators. An independent corporator is one who is not an employee, officer, trustee or significant borrower of Westborough Savings. We will complete the reorganization only upon completion of the sale of the shares of common stock offered in this prospectus and approval of the plan of reorganization by the voting corporators.

The aggregate price of the shares of common stock to be issued in the reorganization will be within the offering range. The offering range has been established by the Board of Trustees to be between $5,950,000 and $8,050,000 and is based upon an independent appraisal of the estimated pro forma market value of the common stock of Westborough Financial Services. The appraisal was prepared by RP Financial, a consulting firm experienced in the valuation and appraisal of savings institutions. All shares of common stock to be issued and sold in the reorganization will be sold at the same price ($10.00) per share. The independent appraisal will be affirmed or, if necessary, updated at the completion of the offering. See "--How We Determined the Offering Range and the $10.00 Price Per Share" for additional information as to the determination of the estimated pro forma market value of the common stock.

THE FOLLOWING IS A BRIEF SUMMARY OF PERTINENT ASPECTS OF THE REORGANIZATION. THE SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE PROVISIONS OF THE PLAN OF REORGANIZATION. A COPY OF THE PLAN IS AVAILABLE FROM WESTBOROUGH SAVINGS UPON REQUEST AND IS AVAILABLE FOR INSPECTION AT THE OFFICES OF WESTBOROUGH SAVINGS AND AT THE DIVISION OF BANKS. THE PLAN IS ALSO FILED AS AN EXHIBIT TO THE REGISTRATION STATEMENT OF WHICH THIS PROSPECTUS IS A PART, COPIES OF WHICH MAY BE OBTAINED FROM THE SEC. SEE "WHERE YOU CAN FIND ADDITIONAL INFORMATION."

REASONS FOR THE REORGANIZATION

Formation of The Westborough Bank as a capital stock savings bank subsidiary of Westborough Financial Services will permit Westborough Financial Services to issue common stock, which is a source of capital not available to mutual savings banks.

Westborough Savings' mutual form of ownership will be preserved in Westborough Bancorp, MHC. Westborough Bancorp, MHC, as a mutual savings bank holding company, will own at least a majority of the common stock of Westborough Financial Services as long as Westborough Bancorp, MHC remains in existence. The reorganization will allow Westborough Savings to achieve certain benefits of a stock company without a loss of control that is possible in a full savings institution conversion from mutual to stock form. In a standard conversion, a newly converted savings institution or its newly formed holding company sells 100% of its common stock in a single stock offering. The mutual holding company structure also will give Westborough Financial Services flexibility to issue its common stock at various times and in varying amounts as market conditions permit, rather than in a single stock offering. This makes the deployment of the capital that we raise more manageable.

The proceeds from the sale of common stock of Westborough Financial Services will provide Westborough Bank with new capital, which will support future diversification of its product lines and market share growth. In particular, such proceeds will enhance Westborough Bank's ability to expand its franchise through increased lending, make necessary capital investments in facilities and technology, diversify products offered to its customers and establish additional branch locations. The reorganization also will enable Westborough Financial Services and Westborough Bank to better manage its capital by providing broader investment opportunities through the holding company structure, and by enabling Westborough Bank to distribute capital to stockholders of Westborough Financial Services in the form of dividends.

The ability of Westborough Financial Services to sell additional common stock also will enable Westborough Financial Services and Westborough Bank to increase their capital in response to any future regulatory capital requirement levels. While Westborough Savings currently exceeds all regulatory capital requirements, the sale of common stock in connection with the reorganization will assist Westborough Bank with the orderly preservation and expansion of its capital base and will provide flexibility to respond to sudden and unanticipated capital needs.

After completion of the reorganization, the unissued common and preferred stock authorized by Westborough Financial Services' Articles of Organization will permit Westborough Financial Services to raise additional equity capital through further sales of securities and to issue securities in connection with possible acquisitions, subject to market conditions and any required regulatory approval of an offering. Westborough Financial Services, however, currently has no plans with respect to additional offerings of securities. Following the reorganization, we intend to use stock-related incentive programs to attract and retain executive and other personnel for itself and its subsidiaries. See "Management."

The mutual holding company form of organization will provide additional flexibility to diversify our business activities through acquisitions of or mergers with both mutual and stock savings institutions, as well as other companies. Although there are no current arrangements, understandings or agreements, written or oral, regarding any such opportunities, Westborough Financial Services will be in a position after the reorganization to take advantage of any such favorable opportunities that may arise. See "How We Intend to Use the Proceeds from the Offering" for a description of our intended use of proceeds.

While there are benefits associated with the mutual holding company form of organization, this form of organization involves additional costs associated with its maintenance and regulation, including additional administrative expenses, taxes, regulatory filings and examination fees.

After considering the advantages and disadvantages of the reorganization, as well as applicable fiduciary duties, the Board of Trustees of Westborough Savings unanimously approved the reorganization as being in the best interests of Westborough Savings, its depositors and the communities it serves.

EFFECTS OF THE REORGANIZATION

GENERAL. Each depositor in a mutual savings bank has both a deposit account in the institution and a pro rata ownership interest in the equity of the savings institution based upon the balance in the depositor's account. This interest may only be realized in the event of a liquidation of the savings institution. However, this ownership interest is tied to the depositor's account and has no tangible market value separate from such deposit account. Any depositor who opens a deposit account obtains a pro rata ownership interest in the equity of the institution without any additional payment beyond the amount of the deposit. A depositor who reduces or closes such depositor's account receives the balance in the account but receives nothing for such depositor's ownership interest in the equity of the institution, which is lost to the extent that the balance in the account is reduced. Consequently, depositors of a mutual savings bank have no way to realize the value of their ownership interest, except in the unlikely event that the mutual savings bank is liquidated. In such event, the depositors of record at that time would share pro rata in any residual surplus and reserves after other claims, including claims of depositors to the amounts of their deposits, are paid.

When a mutual savings bank converts to stock form, permanent non-withdrawable capital stock is created to represent the ownership of the institution's equity and the former pro rata ownership of depositors is thereafter represented exclusively by their liquidation rights. SUCH CAPITAL STOCK IS SEPARATE AND APART FROM DEPOSIT ACCOUNTS AND CANNOT BE AND IS NOT INSURED BY THE FDIC OR ANY OTHER GOVERNMENTAL AGENCY. Certificates are issued to evidence ownership of the capital stock. The stock certificates are transferable, and, therefore, the stock may be sold or traded with no effect on any deposit account the seller may hold in the institution.

CONTINUITY. While the reorganization is being accomplished, and after completion of the reorganization, the routine business of Westborough Bank of accepting deposits and making loans will continue without interruption. Westborough Bank will continue to be subject to regulation by the Division and the FDIC. After the reorganization, Westborough Bank will continue to provide services for depositors and borrowers under current policies by its management and staff.

The Board of Trustees and corporators serving Westborough Savings immediately before the reorganization will serve as the Board of Directors of Westborough Bank and the corporators of Westborough Bancorp, MHC, respectively, after the reorganization. The directors of Westborough Financial Services and the trustees of Westborough Bancorp, MHC will consist of all of the individuals currently serving on the Board of Trustees of Westborough Savings. We anticipate that all officers of Westborough Savings serving immediately before the reorganization will retain their positions after the reorganization. See "Management."

DEPOSIT ACCOUNTS AND LOANS. Under the plan of reorganization, each depositor in Westborough Savings at the time of the reorganization will automatically continue as a depositor of Westborough Bank after the reorganization. Each deposit account will remain the same with respect to deposit balance, interest rate and other terms, except to the extent affected by withdrawals made to purchase common stock in the offering. See "--Procedure for Purchasing Shares in Subscription and Community Offerings." Each deposit account will be insured by the FDIC and the Depositors Insurance Fund to the same extent as before the reorganization. Depositors will continue to hold their existing certificates of deposit, passbooks and other evidences of their accounts.

Furthermore, no loan outstanding from Westborough Savings will be affected by the reorganization, and the amount, interest rate, maturity and security for each loan will remain as they were contractually fixed prior to the reorganization.

VOTING RIGHTS OF DEPOSITORS. Voting rights and control of Westborough Savings, as a mutual savings bank, are vested in the Board of Trustees. After the reorganization, direction of Westborough Bank will be under the control of the Board of Directors of Westborough Bank. Westborough Financial Services, as the holder of all of the outstanding common stock of Westborough Bank, will have exclusive voting rights with respect to any matters concerning Westborough Bank requiring stockholder approval, including the election of directors of Westborough Bank.

After the reorganization, the holders of the common stock of Westborough Financial Services will have exclusive voting rights with respect to any matters concerning Westborough Financial Services. These voting rights will be exclusive except to the extent Westborough Financial Services in the future issues preferred stock with voting rights. Each holder of common stock will be entitled to vote on any matters to be considered by Westborough Financial Services' stockholders, including the election of directors of Westborough Financial Services, subject to the restrictions and limitations set forth in Westborough Financial Services' Articles of Organization discussed below.

By virtue of its ownership of a majority of the outstanding shares of common stock, Westborough Bancorp, MHC will be able to elect all members of the Board of Directors of Westborough Financial Services and generally will be able to control the outcome of most matters presented to the stockholders of Westborough Financial Services for resolution by vote. However, current regulations and regulatory policies require that adoption of a stock option plan, management recognition plan or second step conversion of Westborough Bancorp, MHC be approved by a majority vote of the shares held by the public stockholders (I.E., all stockholders except Westborough Bancorp, MHC).

Westborough Bancorp, MHC will be controlled by its Board of Trustees, which will initially consist of the current trustees of Westborough Savings. Following the reorganization, approximately one-third of the trustees of Westborough Bancorp, MHC will be elected annually by the corporators of Westborough Bancorp, MHC. The initial corporators of Westborough Bancorp, MHC will consist of all of the corporators of Westborough Savings at the time of the reorganization. Thereafter, corporators of Westborough Bancorp, MHC will be nominated by the Board of Trustees and elected by the corporators pursuant to the Bylaws of Westborough Bancorp, MHC.

DEPOSITORS' RIGHTS IF WE LIQUIDATE; LIQUIDATION ACCOUNT. In the unlikely event of a complete liquidation of Westborough Savings in its current mutual form, each depositor would receive a pro rata share of any assets of Westborough Savings remaining after payment of claims of all creditors (including the claims of all depositors to the withdrawable value of their accounts). Each depositor's pro rata share of such liquidating distribution would be in the same proportion as the value of such depositor's deposit account was to the total value of all deposit accounts in Westborough Savings at the time of liquidation.

Upon a complete liquidation of Westborough Bank after the reorganization, each depositor would have a claim as a creditor of the same general priority as the claims of all other general creditors of Westborough Bank. However, except as described below, a depositor's claim would be solely for the amount of the balance in such depositor's deposit account plus accrued interest. Such depositor would not have an interest in the value or assets of Westborough Bank above that amount. Instead, the holder of Westborough Bank's common stock (I.E., Westborough Financial Services) would be entitled to any assets remaining upon a liquidation of Westborough Bank.

The plan of reorganization provides for the establishment, upon the completion of the reorganization, of a special "liquidation account" for the benefit of eligible account holders and supplemental eligible account holders in an amount equal to the net worth of Westborough Savings as

of the date of its latest balance sheet contained in this prospectus. Upon a complete liquidation of Westborough Bank after the reorganization, each eligible account holder and supplemental eligible account holder, who continues to maintain such account holder's deposit account at Westborough Bank, would be entitled to an interest in the liquidation account prior to any payment to the holders of Westborough Bank's capital stock. Each eligible account holder and supplemental eligible account holder will have a pro rata interest in the total liquidation account for the account holder's deposit accounts based on the proportion that the aggregate balance of such person's qualifying deposit accounts on December 31, 1997 (the eligibility record date) and December 31, 1998 (the supplemental eligibility record date), as applicable, bore to the aggregate balance of all qualifying deposit accounts of all eligible account holders and supplemental eligible account holders. For this purpose, qualifying deposit accounts include all savings, certificate of deposit, demand, negotiable orders of withdrawal (NOW), money market and passbook accounts maintained at Westborough Bank (excluding any escrow accounts).

If, however, on any annual closing date (I.E., the anniversary of the eligibility record date or supplemental eligibility record date, as applicable) of Westborough Savings, commencing on or after the effective date of the reorganization, the amount in any deposit account is less than the amount in such deposit account on December 31, 1997 (with respect to an eligible account holder), or December 31, 1998 (with respect to a supplemental eligible account holder) or any other annual closing date, then the interest in the liquidation account relating to the deposit account would be reduced from time to time by the proportion of any such reduction, and such interest will cease to exist if such deposit account is closed. For purposes of the liquidation account, certificates of deposit will be deemed to be closed upon maturity regardless of renewal. In addition, no interest in the liquidation account would ever be increased despite any subsequent increase in the related deposit account.

Any assets remaining after the above liquidation rights of eligible account holders and supplemental eligible account holders are satisfied would be distributed to Westborough Financial Services as the sole stockholder of Westborough Bank.

Upon a complete liquidation of Westborough Financial Services, each holder of shares of the common stock of Westborough Financial Services, including Westborough Bancorp, MHC, would be entitled to receive a pro rata share of Westborough Financial Services' assets, following payment of all debts, liabilities and claims of greater priority of or against Westborough Financial Services including the rights of depositors in the liquidation account of Westborough Bank, if any.

If liquidation of Westborough Bancorp, MHC occurs following completion of the reorganization, all depositors of Westborough Bank at that time will be entitled, pro rata to the value of their deposit accounts, to a distribution of any assets of Westborough Bancorp, MHC remaining after payment of all debts and claims of creditors.

TAX ASPECTS. The reorganization may be effected in any manner approved by the Division that is consistent with the purposes of the plan of reorganization and applicable law, regulations and policies. However, Westborough Savings intends to consummate the reorganization using a series of transactions as described below. This structure enables Westborough Savings to retain all of its historical tax attributes and produces significant savings to Westborough Savings because it simplifies regulatory approvals and conditions associated with the completion of the reorganization.

The merger structure will be accomplished as follows:

(1) Corporators of Westborough Savings will organize a Massachusetts chartered de novo mutual savings bank, known as Westborough De Novo Savings Bank;

(2) De Novo Savings Bank will reorganize into a Massachusetts chartered mutual holding company and will form a de novo stock savings bank subsidiary ("Interim"), and all of the assets and liabilities of De Novo Savings Bank will be transferred to Westborough Bank;

(3) Westborough Savings will merge with and into Interim with Westborough Bank as the resulting entity;

(4) Westborough Bancorp, MHC will organize Westborough Financial Services as a separate wholly-owned subsidiary of Westborough Bancorp, MHC;

(5) Westborough Bancorp, MHC will contribute all of the shares of the common stock of Westborough Bank to Westborough Financial Services, which will result in Westborough Bancorp, MHC owning 100% of the common stock of Westborough Financial Services and Westborough Financial Services owning 100% of the common stock of Westborough Bank; and

(6) Westborough Financial Services will offer to sell up to 49% of its common stock pursuant to the plan of reorganization.

The transactions described in steps two through five will occur simultaneously, and the transaction described in step 6 will occur as soon as practicable thereafter and as part of the reorganization. As a result of the reorganization, Westborough Financial Services will be a majority-owned subsidiary of Westborough Bancorp, MHC and Westborough Bank will be a wholly-owned subsidiary of Westborough Financial Services. Pursuant to the reorganization, the holders of deposit accounts in Westborough Savings will become holders of deposit accounts in Westborough Bank in the same amount and on the same terms and conditions, and will hold liquidation interests in Westborough Bancorp, MHC substantially similar to the liquidation interests in Westborough Savings.

Under this structure: (i) the conversion is intended to be a tax-free reorganization under Code section 368(a)(1)(F); and (ii) the exchange of the shares of Westborough Bank's initial common stock deemed constructively received by depositors for liquidation interests in Westborough Bancorp, MHC (the "Exchange") is intended to be a tax-free exchange under Code section 351.

Under the plan of reorganization, consummation of the reorganization is conditioned upon, among other things, the prior receipt by Westborough Savings of either a private letter ruling from the IRS and from the Massachusetts taxing authorities or an opinion of Thacher Proffitt & Wood as to the federal income tax consequences and from Wolf & Co., P.C. as to the Massachusetts income tax consequences of the reorganization to Westborough Savings (in both its mutual and stock form), Westborough Financial Services and the eligible account holders and supplemental account holders. In Revenue Procedure 96-3, 1996-1 I.R.B. 82, the IRS announced that it will not rule on whether a transaction qualifies as a tax-free reorganization under Code section 368(a)(1)(F) or as a tax-free exchange of stock for stock in the formation of a holding company under Code section 351, but that it will rule on significant sub-issues that must be resolved to determine whether the transaction qualifies under either of these Code sections.

Westborough Savings has requested a private letter ruling from the IRS regarding certain significant sub-issues associated with the reorganization. Based in part upon this private letter ruling and certain representations of Westborough Savings or its officers. Thacher Proffitt & Wood will issue its opinion regarding certain federal income tax consequences of the reorganization. We can not assure you that we will obtain a private letter ruling.

In the following discussion, "Mutual Bank" refers to Westborough Savings before the reorganization and "Stock Bank" refers to Westborough Savings after the reorganization.

With regard to the reorganization, Thacher Proffitt & Wood intends to issue an opinion that:

(1) the conversion will constitute a "reorganization" under Code section
368(a)(1)(F), and Westborough Savings (in either its status as Mutual Bank or Stock Bank) will recognize no gain or loss as a result of the conversion;

(2) the basis of each asset of Mutual Bank received by Stock Bank in the conversion will be the same as Mutual Bank's basis for such asset immediately prior to the conversion;

(3) the holding period of each asset of Mutual Bank received by Stock Bank in the reorganization will include the period during which such asset was held by Mutual Bank prior to the conversion;

(4) For purposes of Code section 381(b), Stock Bank will be treated as if there had been no conversion and, accordingly, the taxable year of the Mutual Bank will not end on the effective date and the tax attributes of Mutual Bank (subject to application of Code sections 381, 382, and 384), including Mutual Bank's tax bad debt reserves and earnings and profits, will be taken into account by Stock Bank as if there had been no conversion;

(5) Mutual Bank's qualifying depositors will recognize no gain or loss upon their constructive receipt of shares of Stock Bank common stock solely in exchange for their interest (I.E., liquidation rights) in Mutual Bank;

(6) no gain or loss will be recognized by the depositors of Westborough Savings (formerly Mutual Bank) upon the transfer to Westborough Bancorp, MHC of shares of Stock Bank common stock they constructively received in the conversion in exchange for interests (I.E., liquidation rights) in Westborough Bancorp, MHC; and

(7) no gain or loss will be recognized by depositors of Mutual Bank upon the issuance to them of deposits in Stock Bank in the same dollar amount as their deposits in the Mutual Bank.

Unlike private rulings of the IRS, an opinion of counsel is not binding on the IRS and the IRS could disagree with conclusions reached in the opinion. If there is a disagreement, we can not guarantee that the IRS would not prevail in a judicial or administrative proceeding.

Wolf & Co., P.C. intends to opine, subject to the limitations and qualifications in its opinion, that, for purposes of the Massachusetts corporate income tax, the reorganization will not become a taxable transaction to Westborough Savings (in either its status as Mutual Bank or Stock Bank), Westborough Bancorp, MHC, Westborough Financial Services, the stockholders of Westborough Financial Services or the depositors of Westborough Savings.

ACCOUNTING CONSEQUENCES. The reorganization will be accounted for in a manner similar to a pooling-of-interests under generally accepted accounting principles. Accordingly, the carrying value of our assets, liabilities, and capital will be unaffected by the reorganization and will be reflected in the Westborough Financial Services' and Westborough Bank's consolidated financial statements based on their historical amounts.

HOW WE DETERMINED THE OFFERING RANGE AND THE $10.00 PRICE PER SHARE

The plan of reorganization requires that the purchase price of the common stock must be based on the appraised pro forma market value of the common stock, as determined on the basis of an independent valuation. Westborough Savings and Westborough Financial Services have retained RP Financial to make the independent valuation. RP Financial's fees for its services in making such appraisal are estimated to be $27,500. Westborough Savings and Westborough Financial Services will indemnify RP Financial and its employees and affiliates against losses (including any losses in connection with claims under the federal securities laws) arising out of its services as appraiser, except where RP Financial's liability results from its negligence or bad faith.

An appraisal has been made by RP Financial in reliance upon the information contained in this prospectus, including the financial statements. RP Financial also considered the following factors, among others:

- the present and projected operating results and financial condition of Westborough Financial Services and Westborough Savings, and the economic and demographic conditions in Westborough Savings' existing market area;

- historical, financial and other information relating to Westborough Savings;

- a comparative evaluation of the operating and financial statistics of Westborough Savings with those of other similarly situated publicly traded mutual holding companies, savings associations and savings institutions located in New England;

- the aggregate size of the offering of the common stock;

- the impact of the reorganization on Westborough Savings' equity and earnings potential;

- the proposed dividend policy of Westborough Financial Services and Westborough Bank; and

- the trading market for securities of comparable institutions and general conditions in the market for such securities.

Two of the factors that RP Financial considered in determining our market value were the price-to-book ratio and the price-to-earnings ratio or P/E ratio. The price-to-book ratio represents the price per share of stock divided by its book value per share. After completion of the reorganization, each share of Westborough Financial Services common stock, including the shares we issue to Westborough Bancorp, MHC, will have a book value of $12.58, assuming we sell 700 thousand shares in the minority offering. This means that the price you pay for each share in this offering will be 79.49% of the book value.

The P/E ratio represents the price per share of stock divided by earnings or net income per share. In our case, for 1998, our P/E ratio as adjusted to reflect the issuance of our stock in the offering, would have been 14.9x, assuming we sold 700 thousand shares of stock.

On the basis of the foregoing, RP Financial has advised Westborough Financial Services and Westborough Savings that, in its opinion, dated May 21, 1999, the estimated pro forma market value of the common stock on a fully converted basis ranged from a minimum of $17.0 million to a maximum of $23.0 million with a midpoint of $20.0 million (the "estimated valuation range").

The Board of Trustees of Westborough Savings held a meeting to review and discuss the original appraisal report prepared by RP Financial. Representatives of RP Financial participated in the meeting to explain the contents of the appraisal report. The Board of Trustees reviewed the methods that RP Financial used to determine the pro forma market value of the common stock and the appropriateness of the assumptions that RP Financial used in determining this value. The Board of Trustees determined that 35% of the shares to be issued by Westborough Financial Services will be offered to public stockholders. In addition the Board of Trustees determined that the common stock will be sold at $10.00 per share, which is the price most commonly used in stock offerings involving converting savings institutions.

The Board of Trustees established an offering range of $5.95 million to $8.1 million, with a midpoint of $7.0 million. Westborough Financial Services expects to issue between 595,000 and 805,000 shares of common stock. The offering range takes into account that Westborough Bank must be a majority-owned subsidiary of Westborough Financial Services or Westborough Bancorp, MHC as long as Westborough Bancorp, MHC is in existence. The estimated valuation range and the offering range may be amended with the approval of the Division and FDIC (if required), due to subsequent

developments in the financial condition of Westborough Financial Services or Westborough Savings or market conditions generally.

THE VALUATION PREPARED BY RP FINANCIAL IS NOT INTENDED, AND MUST NOT BE CONSTRUED, AS A RECOMMENDATION OF ANY KIND AS TO THE ADVISABILITY OF PURCHASING SUCH SHARES. RP FINANCIAL DID NOT INDEPENDENTLY VERIFY THE FINANCIAL STATEMENTS AND OTHER INFORMATION PROVIDED BY WESTBOROUGH SAVINGS, NOR DID RP FINANCIAL VALUE INDEPENDENTLY THE ASSETS OR LIABILITIES OF WESTBOROUGH SAVINGS. THE VALUATION CONSIDERS WESTBOROUGH SAVINGS AS A GOING CONCERN AND SHOULD NOT BE CONSIDERED AS AN INDICATION OF THE LIQUIDATION VALUE OF WESTBOROUGH SAVINGS. MOREOVER, BECAUSE SUCH VALUATION IS NECESSARILY BASED UPON ESTIMATES AND PROJECTIONS OF A NUMBER OF MATTERS, ALL OF WHICH ARE SUBJECT TO CHANGE FROM TIME TO TIME, NO ASSURANCE CAN BE GIVEN THAT PERSONS PURCHASING SUCH SHARES IN THE REORGANIZATION WILL THEREAFTER BE ABLE TO SELL SUCH SHARES AT PRICES AT OR ABOVE THE PURCHASE PRICE.

The maximum of the estimated valuation range may be increased up to 15% and the number of shares of common stock to be issued in the reorganization may be increased to 925,750 shares due to regulatory considerations, changes in the market and general financial and economic conditions without the resolicitation of subscribers. See "--Limitations on Common Stock Purchases" as to the method of distribution and allocation of additional shares that may be issued in the event of an increase in the estimated valuation range to fill unfilled orders in the subscription and community offerings.

We may not sell any shares of common stock unless RP Financial confirms to Westborough Savings, Westborough Financial Services, the Division and the FDIC that, to the best of its knowledge, nothing of a material nature has occurred which, taking into account all relevant factors, would cause RP Financial to conclude that the aggregate value of the common stock is incompatible with its estimate of the pro forma market value of the common stock at the conclusion of the offering.

If RP Financial confirms at the conclusion of the offering that the pro forma market value of the common stock is not more than the maximum and not less than the minimum of the estimated valuation range then, with the approval of the Division and the FDIC, the number of shares of common stock to be issued in the offering will be not more than 805,000 shares and not less than 595,000 shares. If RP Financial concludes that the pro forma market value of the common stock is greater than the maximum of the estimated valuation range but not more than 15% above the maximum of the estimated valuation range, then the number of shares of common stock to be issued may be increased to not more than 925,750 shares. In addition, all shares purchased in the offering will be purchased for the purchase price of $10.00 per share. If the number of shares issued in the reorganization is increased due to an increase of up to 15% in the estimated valuation range to reflect changes in market or financial conditions, persons who subscribed for the maximum number of shares will not be given the opportunity to subscribe for any additional shares. See "--Limitations on Common Stock Purchases."

If RP Financial concludes that the pro forma market value of the common stock is either more than 15% above the maximum of the estimated valuation range or less than the minimum of the estimated valuation range, Westborough Savings and Westborough Financial Services, after consulting with the Division and the FDIC, may:

(1) terminate the Plan and return all funds promptly with interest at Westborough Savings' passbook rate of interest on payments made by check, bank check or money order;

(2) establish a new estimated valuation range and either;

(a) hold new subscription and community offerings; or

(b) provide subscribers the opportunity to change or cancel their orders (a "resolicitation"); or

(3) take such other actions as permitted by the Division and the FDIC in order to complete the reorganization.

If a resolicitation is commenced, unless an affirmative response is received from a subscriber within a designated period of time, all funds will be promptly returned to the subscriber as described above.

An increase in the number of shares to be issued in the reorganization as a result of an increase in the estimated pro forma market value of common stock would decrease both a subscriber's ownership interest and Westborough Financial Services' pro forma net earnings and stockholders' equity on a per share basis while increasing pro forma net earnings and stockholders' equity on an aggregate basis. A decrease in the number of shares to be issued in the reorganization would increase both a subscriber's ownership interest and Westborough Financial Services, Inc' pro forma net earnings and stockholders' equity on a per share basis while decreasing pro forma net earnings and stockholders' equity on an aggregate basis. For a presentation of the effects of such changes see "Pro Forma Data."

If all shares of common stock are not sold through the subscription and community offerings, then Westborough Savings and Westborough Financial Services expect to offer the remaining shares in a syndicated community offering, which would commence during or just after the subscription offering. See "--Syndicated Community Offering."

Copies of the appraisal report of RP Financial, including any amendments thereto, and the detailed memorandum of the appraiser setting forth the method and assumptions for such appraisal are available for inspection at the main office of Westborough Savings and the other locations specified under "Where You Can Find Additional Information."

SUBSCRIPTION OFFERING AND SUBSCRIPTION RIGHTS

In accordance with the plan of reorganization, rights to subscribe for the purchase of common stock have been granted under the plan of reorganization to the following persons in the following order of priority:

(1) depositors with deposits in Westborough Savings with balances aggregating $50 or more ("qualifying deposits") as of December 31, 1997 ("eligible account holders"); for this purpose, deposit accounts include any withdrawable deposits offered by Westborough Savings, including negotiable orders of withdrawal (NOW), certificates of deposit, demand deposits and IRA and Keogh plans for which Westborough Savings acts as custodian or trustee;

(2) tax-qualified employee benefit plans of Westborough Financial Services, Westborough Savings or Westborough Bancorp, MHC, including the employee stock ownership plan;

(3) depositors with qualifying deposits in Westborough Savings on December 31, 1998, other than those depositors who would otherwise qualify as eligible account holders ("supplemental eligible account holders").

All subscriptions received will be subject to the availability of common stock after satisfaction of all subscriptions of all persons having prior rights in the subscription offering and to the maximum and minimum purchase limitations set forth in the plan of reorganization and as described below under "--Limitations on Common Stock Purchases."

PRIORITY 1: ELIGIBLE ACCOUNT HOLDERS. Each eligible account holder will receive, as first priority and without payment therefor, non-transferable rights to subscribe for shares of common stock in the subscription offering. Subscriptions by eligible account holders are subject to maximum and minimum purchase limitations. See "--Limitations on Common Stock Purchases."

If there are not sufficient shares available to satisfy all subscriptions, shares first will be allocated so as to permit each subscribing eligible account holder to purchase a number of shares sufficient to make such eligible account holder's total allocation equal to the lesser of 100 shares or the number of shares subscribed for. Thereafter, unallocated shares will be allocated among the remaining subscribing

eligible account holders whose subscriptions remain unfilled in the proportion that the amounts of their respective aggregate qualifying deposits bear to the total amount of qualifying deposits of all remaining eligible account holders whose subscriptions remain unfilled. However, no fractional shares shall be issued.

To ensure a proper allocation of stock, each eligible account holder must list on his or her stock order form all deposit accounts in which such eligible account holder had an ownership interest at December 31, 1997. Failure to list an account could result in fewer shares being allocated than if all accounts had been disclosed. The subscription rights of eligible account holders who are also trustees or executive officers of Westborough Savings or their associates will be subordinated to the subscription rights of other eligible account holders to the extent attributable to increased deposits in the one-year period preceding December 31, 1997.

PRIORITY 2: THE TAX-QUALIFIED EMPLOYEE BENEFIT PLANS. To the extent that there are sufficient shares remaining after satisfaction of the subscriptions by eligible account holders, the tax-qualified employee benefit plans, including the employee stock ownership plan, will receive, as a second priority and without payment therefor, non-transferable subscription rights to purchase up to 10% of the common stock to be issued in the offering. As a tax-qualified employee benefit plan, the employee stock ownership plan intends to purchase 8% of the shares to be issued in the offering, or 47,600 shares, based on the issuance of 595,000 shares at the minimum of the offering range or 64,400 shares based on the issuance of 805,000 at the maximum of the offering range. Subscriptions by the employee stock ownership plan will not be aggregated with shares of common stock purchased directly by or which are otherwise attributable to any other participants in the subscription and community offerings, including subscriptions of any of Westborough Savings' trustees, officers, employees or associates thereof. To the extent shares are not available in the offering to fill all or part of the purchase order of the employee stock ownership plan, this plan intends to purchase shares in private transactions or on the open market after completion of the offering.

PRIORITY 3: SUPPLEMENTAL ELIGIBLE ACCOUNT HOLDERS. Each supplemental eligible account holder will receive, as a third priority and without payment therefor, non-transferable rights to subscribe for shares of common stock in the subscription offering. Subscriptions by supplemental eligible account holders are subject to maximum and minimum purchase limitations. See "--Limitations on Common Stock Purchases."

If there are not sufficient shares available to satisfy all subscriptions of all supplemental eligible account holders, after purchases by eligible account holders and the tax-qualified employee benefit plans, available shares first will be allocated among subscribing supplemental eligible account holders so as to permit each supplemental eligible account holder to purchase a number of shares sufficient to make such supplemental eligible account holder's total allocation equal to the lesser of 100 shares or the number of shares subscribed for. Thereafter, unallocated shares will be allocated among the remaining subscribing supplemental eligible account holders whose subscriptions remain unfilled in the proportion that the amounts of their respective aggregate qualifying deposits bear to the total amount of qualifying deposits of all remaining supplemental eligible account holders whose subscriptions remain unfilled. However, no fractional shares shall be issued.

To ensure a proper allocation of stock, each supplemental eligible account holder must list on his or her stock order form all deposit accounts in which such supplemental eligible account holder had an ownership interest at December 31, 1998. Failure to list an account could result in fewer shares being allocated than if all accounts had been disclosed.

EXPIRATION DATE FOR THE SUBSCRIPTION OFFERING. The subscription offering will expire at 12:00 noon, Eastern Time, on , 1999, unless we extend this period for an initial period of up to 45 days. We may further extend this period for additional 60 day periods with the approval of the Division and, if

necessary, the FDIC. Subscription rights which have not been exercised prior to the expiration date, as extended, will become void.

If all shares have not been subscribed for or sold by the expiration date, as extended, all funds delivered to Westborough Savings will be returned with interest promptly to the subscribers and all withdrawal authorizations will be canceled. If an extension beyond the 45-day period following the expiration date is granted, Westborough Savings will notify subscribers of the extension of time and of any rights of subscribers to change or cancel their orders. Each extension may not exceed 60 days, and all extensions, in the aggregate, may not last beyond .

PERSONS IN NON-QUALIFIED STATES OR FOREIGN COUNTRIES. Westborough Financial Services and Westborough Savings will make reasonable efforts to comply with the securities laws of all states in the United States in which persons entitled to subscribe for stock pursuant to the plan or reorganization reside. However, Westborough Savings and Westborough Financial Services are not required to offer stock in the subscription offering to any person who resides in a foreign country.

COMMUNITY OFFERING

To the extent that shares remain available for purchase after satisfaction of all subscriptions received in the subscription offering, Westborough Savings may offer shares pursuant to the plan of reorganization in the community offering to residents in the towns of Grafton, Hopkinton, Northborough, Shrewsbury, Southborough and Westborough (the "Community"). The term "residents" includes persons who occupy a dwelling within the Community and establish an ongoing physical presence within it, together with an indication that such presence is not merely transitory in nature (the determination of resident status will be made by Westborough Savings, in its sole discretion).

Orders received in the community offering are subject to maximum and minimum purchase limitations. See "--Limitations on Common Stock Purchases." The community offering, if any, shall commence concurrently with or subsequent to the commencement of the subscription offering and shall terminate no later than 45 days after the expiration of the subscription offering unless extended by Westborough Savings and Westborough Financial Services, with the approval of the Division and the FDIC, if necessary.

THE OPPORTUNITY TO SUBSCRIBE FOR SHARES OF COMMON STOCK IN THE COMMUNITY OFFERING CATEGORY IS SUBJECT TO THE RIGHT OF WESTBOROUGH SAVINGS AND WESTBOROUGH FINANCIAL SERVICES, IN THEIR DISCRETION, TO ACCEPT OR REJECT ANY SUCH ORDERS IN WHOLE OR IN PART EITHER AT THE TIME OF RECEIPT OF AN ORDER OR AS SOON AS PRACTICABLE FOLLOWING THE EXPIRATION DATE. IF WESTBOROUGH FINANCIAL SERVICES REJECTS A SUBSCRIPTION IN PART, THE SUBSCRIBER WILL NOT HAVE THE RIGHT TO CANCEL THE REMAINDER OF HIS OR HER SUBSCRIPTION.

If there is an oversubscription for shares in the community offering, shares will be allocated on a priority basis in the following order: natural persons residing in the Community, any other person subscribing for shares in the community offering such that each person may receive 1,000 shares, and on a pro rata basis to such persons based on the amount of their respective subscriptions. If an oversubscription occurs in the other depositors category, shares will be allocated first to each subscriber whose order is accepted by Westborough Savings in an amount equal to the lesser of 100 shares or the number of shares subscribed for by each such subscriber, if possible. Thereafter, we will allocate the unallocated shares among such subscribers whose order remains unsatisfied in the same proportion that each such subscriber's qualifying deposit bears to the total amount of qualifying deposits of all subscribers whose subscriptions remain unfilled.

MARKETING ARRANGEMENTS

TRIDENT SECURITIES, INC. Westborough Savings, Westborough Financial Services and Westborough Bancorp, MHC have engaged Trident Securities as a financial and sales agent in connection with the

offering of the common stock. Trident Securities has agreed to use its best efforts to assist Westborough Financial Services with the solicitation of subscriptions and orders for shares of common stock in the offering.

Trident Securities will receive fees for services provided in connection with the offering equal to 2.0% of the aggregate purchase price of common stock sold in the offering. No fees will be paid to Trident Securities with respect to any shares of common stock purchased by any trustee, executive officer, employee or employee benefit plan of Westborough Savings or Westborough Financial Services. Additionally, no fees will be paid to Trident Securities with respect to any shares of common stock purchased by associates of Westborough Savings' trustees or executive officers. If there is a syndicated community offering, we will pay Trident Securities a fee equal to % of the aggregate purchase price of common stock sold in the syndicated community offering. However, the aggregate fees payable to Trident Securities and any selected dealers in connection with any syndicated community offering will not exceed 4.5% of the aggregate purchase price of the common stock sold in the syndicated community offering. Total fees to Trident Securities, Inc. are estimated to be $98,230 and $136,870 at the minimum and the maximum of the offering range, respectively. See "Pro Forma Data" for the assumptions used to arrive at these estimates. Trident Securities will also be reimbursed for its reasonable out-of-pocket expenses, including legal fees of up to $30 thousand and non-legal expenses up to a maximum of $15 thousand.

DIRECTORS/TRUSTEES AND EMPLOYEES. Directors and executive officers of Westborough Financial Services and trustees and executive officers Westborough Savings may participate in the solicitation of offers to purchase common stock. Other employees of Westborough Savings may participate in the offering in ministerial capacities or provide clerical work in effecting a sales transaction. Such other employees have been instructed not to solicit offers to purchase common stock or provide advice regarding the purchase of common stock. Westborough Financial Services will rely on Rule 3a4-1 under the Exchange Act, and sales of common stock will be conducted within the requirements of Rule 3a4-1, so as to permit directors, trustees and employees to participate in the sale of common stock. No director or trustee, as the case may be, or employee of Westborough Financial Services or Westborough Savings will be compensated in connection with his or her participation by the payment of commissions or other remuneration based either directly or indirectly on transactions in common stock.

PROCEDURE FOR PURCHASING SHARES IN SUBSCRIPTION AND COMMUNITY OFFERINGS

USE OF ORDER FORMS. To purchase shares in the subscription offering and the community offering, an executed order form with the required payment for each share subscribed for, or with appropriate authorization for withdrawal from a subscriber's deposit account at Westborough Savings (which may be given by completing the appropriate blanks in the stock order form), must be received by Westborough Savings by 12:00 noon, Eastern Time, on the expiration date. You must submit your order form by mail or overnight courier, or may drop off your order forms at any of our branch offices. Stock order forms which are not received by such time or are executed defectively or are received without full payment (or correct withdrawal instructions) are not required to be accepted. In addition, we are not obligated to accept orders submitted on photocopied or facsimiled order forms. We have the power to waive or permit the correction of incomplete or improperly executed forms, but do not represent that we will do so. Once received, an executed order form may not be modified, amended or rescinded without our consent unless subscribers are resolicited or the reorganization has not been completed within 45 days after the end of the subscription offering, unless such 45 day period has been extended.

In order to ensure that eligible account holders and supplemental eligible account holders are properly identified as to their stock purchase eligibility and priority, depositors must list on the stock order form all deposit accounts as of the applicable eligibility record date giving all names in each account and the account numbers.

To ensure that each purchaser receives a prospectus at least 48 hours prior to the expiration date for the offering, in accordance with Rule 15c2-8 of the Exchange Act, no prospectus will be mailed later than five days prior to such date or hand delivered any later than two days prior to such date. Execution of the stock order form will confirm receipt or delivery in accordance with Rule 15c2-8. Order forms will only be distributed when preceded or accompanied by a prospectus.

PAYMENT FOR SHARES. Payment for subscriptions may be made by cash, if hand delivered, check, bank check, money order or by authorization of withdrawal from deposit accounts maintained with Westborough Savings. Interest will be paid on payments made by cash, check, bank check or money order at Westborough Savings' passbook rate (as opposed to tiered rate) of interest from the date payment is received until the completion or termination of the reorganization. If payment is made by authorization of withdrawal from deposit accounts, the funds authorized to be withdrawn will continue to accrue interest at the contractual rates until completion or termination of the reorganization, but a hold immediately will be placed on such funds, thereby making them unavailable to the depositor.

If a subscriber validly authorizes Westborough Savings to withdraw the amount of the purchase price from a deposit account at Westborough Savings, the withdrawal will be made as of the completion of the reorganization. Westborough Savings will waive any applicable penalties for early withdrawal from certificates of deposit. If the remaining balance in a certificate account is reduced below the applicable minimum balance requirement at the time that the funds actually are transferred under the authorization, the certificate will be canceled at the time of the withdrawal, without penalty, and the remaining balance will be converted into a statement savings account and will earn interest at the passbook rate.

The employee stock ownership plan will not be required to pay for the shares subscribed for at the time it subscribes. Rather, the employee stock ownership plan may pay for such shares of common stock subscribed for at the purchase price upon completion of the offering; PROVIDED, that there is in force from the time of its subscription until such time, a loan commitment acceptable to Westborough Financial Services from an unrelated financial institution or Westborough Financial Services to lend to the employee stock ownership plan the aggregate purchase price of the shares for which it subscribed. Westborough Financial Services intends to provide such a loan to the employee stock ownership plan.

Owners of self-directed IRAs may use the assets of such IRAs to purchase shares of common stock in the subscription and community offerings, provided that such IRAs are not maintained at Westborough Savings. Persons with IRAs maintained at Westborough Savings must have their accounts transferred to an unaffiliated institution or broker to purchase shares of common stock in the subscription and community offerings. In addition, the provisions of ERISA and IRS regulations require that officers, trustees and ten percent stockholders who use self-directed IRA funds to purchase shares of common stock in the subscription and community offerings make such purchases for the exclusive benefit of the IRAs. Instructions on how to transfer IRAs maintained at Westborough Savings can be obtained from the stock information center. Depositors interested in using funds in an IRA to purchase common stock should contact the stock information center as soon as possible.

Certificates representing shares of common stock purchased will be mailed to purchasers to the addresses specified in properly completed order forms, as soon as practicable following completion of the sale of all shares of common stock. Any certificates returned as undeliverable will be disposed of in accordance with applicable law.

RESTRICTIONS ON TRANSFER OF SUBSCRIPTION RIGHTS AND SHARES OF COMMON STOCK

Prior to the completion of the reorganization, regulations prohibit any person with subscription rights from transferring or entering into any agreement or understanding to transfer the legal or beneficial ownership of the subscription rights issued under the plan of reorganization or the shares of common stock to be issued upon their exercise. Such rights may be exercised only by the person to

whom they are granted and only for such person's account. Each person exercising such subscription rights will be required to certify that such person is purchasing shares solely for such person's own account and that such person has no agreement or understanding regarding the sale or transfer of such shares. The regulations also prohibit any person from offering or making an announcement of an offer or an intent to make an offer to purchase such subscription rights or shares of common stock prior to the completion of the reorganization.

WESTBOROUGH SAVINGS AND WESTBOROUGH FINANCIAL SERVICES WILL PURSUE ANY AND ALL LEGAL AND EQUITABLE REMEDIES (INCLUDING FORFEITURE) IN THE EVENT THEY BECOME AWARE OF THE TRANSFER OF SUBSCRIPTION RIGHTS AND WILL NOT HONOR ORDERS KNOWN BY THEM TO INVOLVE THE TRANSFER OF SUCH RIGHTS.

SYNDICATED COMMUNITY OFFERING

The plan of reorganization provides that all shares of common stock not purchased in the subscription offering or the community offering may be offered for sale to the general public in a syndicated community offering on a best efforts basis through a selling group of broker-dealers to be arranged by Trident Securities acting as agent of Westborough Financial Services. Trident Securities has not selected any particular broker-dealers to participate in a syndicated community offering. Westborough Financial Services and Westborough Savings have reserved the right to reject orders in whole or in part in their sole discretion in the syndicated community offering. If Westborough Financial Services or Westborough Savings rejects an order in part, the subscriber will not have the right to cancel the remainder of his or her subscription. Neither Trident Securities nor any registered broker-dealer shall have any obligation to take or purchase any shares of the common stock in the syndicated community offering. However, Trident Securities has agreed to use its best efforts in the sale of shares in any syndicated community offering.

The syndicated community offering will terminate no more than 45 days following the expiration date, unless extended by Westborough Financial Services with the approval of the Division and FDIC. Such extensions may not be beyond
. See "--How We Determined the Offering Range and the $10.00 Price Per Share" above for a discussion of rights of subscribers, if any, in the event an extension is granted.

LIMITATIONS ON COMMON STOCK PURCHASES

The plan of reorganization includes the following limitations on the number of shares of common stock which may be purchased during the reorganization:

(1) The aggregate amount of outstanding common stock of Westborough Financial Services owned or controlled by persons other than Westborough Bancorp, MHC, at the close of the offering will be less than 50% of Westborough Financial Services' total outstanding common stock;

(2) No subscription for fewer than 25 shares will be accepted;

(3) Except for the tax qualified employee benefit plans, the maximum amount of shares of common stock subscribed for or purchased in all categories of the reorganization by any person, together with associates of, and groups of persons acting in concert with, such persons, shall not exceed $100,000;

(4) Each eligible account holder may subscribe for and purchase common stock in the subscription offering in an amount up to $100,000, subject to increase as described below;

(5) The tax-qualified employee benefit plans are permitted to purchase up to 10% of the shares of common stock issued in the offering and, as a tax-qualified employee benefit plan, the employee stock ownership plan intends to purchase 8% of the shares of common stock issued in the offering;

(6) Each supplemental eligible account holder may subscribe for and purchase common stock in the subscription offering in an amount up to $100,000, subject to increase as described below;

(7) Persons purchasing shares of common stock in the community offering, together with associates of and groups of persons acting in concert with such persons, may purchase common stock in the community offering in an amount up to $100,000, subject to increase as described below;

(8) The trustees, officers and corporators of Westborough Savings and their associates in the aggregate, excluding purchases by the tax-qualified employee benefit plans, may purchase up to 32% of the outstanding shares held by persons other than Westborough Bancorp, MHC at the close of the offering;

(9) The trustees, officers and corporators of Westborough Savings and their associates in the aggregate, excluding purchases by the tax-qualified employee benefit plans, may purchase up to 32% of the stockholders' equity of Westborough Financial Services held by persons other than Westborough Bancorp, MHC.

Subject to any required regulatory approval and the requirements of applicable laws and regulations, but without further approval of the corporators of Westborough Savings, the $100,000 individual amount permitted to be subscribed for may be increased up to a maximum of 5% of the shares offered for sale in the offering, exclusive of an increase in the total number of shares issued due to an increase in the offering range of up to 15% (I.E., up to 925,750 shares), at the sole discretion of Westborough Financial Services and Westborough Savings. It is currently anticipated that the individual and overall maximum purchase limitations may be increased if, after a community offering, Westborough Financial Services has not received subscriptions for an aggregate amount equal to at least the minimum of the offering range. If the maximum purchase limitations are increased, subscribers for the maximum amount will be given the opportunity to increase their subscriptions up to the then applicable limit. Requests to purchase additional shares of common stock under this provision will be determined by the Board of Directors of Westborough Financial Services and the Board of Trustees of Westborough Savings and, if approved, allocated on a pro rata basis giving priority in accordance with the priorities set forth in the plan of reorganization and described herein.

If we sell 925,750 shares, the additional shares will be allocated in accordance with the priorities and procedures described in "--Subscription Offering and Subscription Rights" and "--Community Offering."

The term "associate" of a person is defined to mean:

(1) any corporation or organization (other than Westborough Financial Services, Westborough Bancorp, MHC, Westborough Savings or a majority-owned subsidiary of Westborough Savings) of which such person is a director, officer or partner or is directly or indirectly, the beneficial owner of 10% or more of any class of equity securities;

(2) any trust or other estate in which such person has a substantial beneficial interest or as to which such person serves as trustee or in a similar fiduciary capacity; and

(3) any relative or spouse of such person, or any relative of such spouse, who has the same home as such person or who is a director or officer of Westborough Financial Services, Westborough Bancorp, MHC, Westborough Savings or any subsidiary of Westborough Bancorp, MHC or Westborough Financial Services or any affiliate thereof; and

(4) any person "acting in concert" with any of the persons or entities specified in clauses (1) through (3) above; provide, however, that any tax-qualified or non-tax-qualified employee plan will not be deemed to be an associate of any director, trustee or officer of Westborough Bancorp, MHC, Westborough Financial Services or Westborough Saving, for purposes of aggregating total shares that may be acquired or held by directors, trustees and officers and their associates

We have the sole discretion to determine whether prospective purchasers are "associates" or "acting in concert."

Trustees, directors and officers are not treated as associates of each other solely by virtue of holding such positions.

CERTAIN RESTRICTIONS ON PURCHASE OR TRANSFER OF SHARES AFTER THE REORGANIZATION

All shares of common stock purchased in connection with the reorganization by a director, trustee or an executive officer of Westborough Savings, Westborough Bancorp, MHC or Westborough Financial Services, or their associates, will be subject to a restriction that the shares not be sold for a period of one year following the reorganization, except in the event of the death or judicial declaration of incompetence of such director, trustee or executive officer. Each certificate for restricted shares will bear a legend giving notice of this restriction on transfer, and instructions will be issued to the effect that any transfer within such time period of any certificate or record ownership of such shares other than as provided above is a violation of the restriction. Any shares of common stock issued at a later date as a stock dividend, stock split, or otherwise, with respect to such restricted stock will be subject to the same restrictions. The directors and executive officers of Westborough Financial Services and Westborough Savings will also be subject to the federal insider trading rules and any other applicable requirements of the federal securities laws.

Purchases of outstanding shares of common stock of Westborough Financial Services by directors, trustees, corporators or executive officers of Westborough Financial Services, Westborough Bancorp, MHC or Westborough Bank (and any person who was a trustee, corporator or executive officer of Westborough Savings; a trustee, corporator or executive officer of Westborough Bancorp, MHC or a director or executive officer of Westborough Financial Services at any time after the date on which the Board of Trustees of Westborough Savings adopted the plan of reorganization), and their associates during the three-year period following reorganization may be made only through a broker or dealer registered with the SEC, except with the prior written approval of the Division. This restriction does not apply, however, to negotiated transactions involving more than 1% of the outstanding common stock, or purchases of common stock made and held by any tax-qualified or non-tax-qualified employee plan of Westborough Bank or Westborough Financial Services. In addition, no officer or director of Westborough Bank or their associates may purchase capital stock from Westborough Bank for a period of three years following the reorganization.

INTERPRETATION, AMENDMENT AND TERMINATION

All interpretations of the plan of reorganization by the Board of Trustees of Westborough Savings will be final, subject to the authority of the Division and FDIC. The plan of reorganization provides that, if deemed necessary or desirable by the Board of Trustees of Westborough Savings, the plan of reorganization may be substantively amended by a majority vote of the Board of Trustees as a result of comments from regulatory authorities or otherwise, at any time prior to approval of the plan by the corporators. Amendment of the plan of reorganization thereafter requires a majority vote of the Board of Trustees and the approval of the Division and the FDIC. The plan of reorganization shall be terminated if the reorganization is not completed within 24 months from the date on which the corporators of Westborough Savings approve the plan, and such time may not be extended by Westborough Savings. The plan of reorganization may be terminated by a majority vote of the Board of Trustees of Westborough Savings at any time prior to date of the special meeting of corporators, and thereafter by such a vote with the approval of the Division and the FDIC.

POSSIBLE CONVERSION OF WESTBOROUGH BANCORP, MHC TO STOCK FORM

Federal and state regulations and the plan of reorganization permit Westborough Bancorp, MHC to convert from mutual to stock form. Such a transaction is commonly known as a "second-step conversion." There can be no assurance when, if ever, a second-step conversion will occur, and the Board of Trustees has no current intention or plan to undertake a second-step conversion. If a second-step conversion does not occur, Westborough Bancorp, MHC will always own a majority of the common stock of Westborough Financial Services. The Board of Trustees of Westborough Bancorp, MHC and the Board of Directors of Westborough Financial Services will not undertake a second-step conversion for three years following the offering, unless compelling and valid business reasons exist to do so.

In a second-step conversion, Westborough Bancorp, MHC would merge with and into Westborough Bank or Westborough Financial Services, with Westborough Bank or Westborough Financial Services as the resulting entity. Certain depositors of Westborough Bank would receive the right to subscribe for additional shares of Westborough Financial Services. The additional shares of common stock of the holding company issued in the second step conversion would be sold at their aggregate pro forma market value.

In a second-step conversion, each share of common stock outstanding immediately prior to the completion of the second-step conversion held by persons other than Westborough Bancorp, MHC would be automatically converted into and become the right to receive a number of shares of common stock of Westborough Financial Services determined pursuant to an exchange ratio. This exchange ratio would ensure that after the second-step conversion, subject to the adjustments described below (if required by the applicable banking regulators) and any adjustment to reflect the receipt of cash in lieu of fractional shares, the percentage of the to-be-outstanding shares of the resulting entity issued to stockholders other than Westborough Bancorp, MHC in exchange for their common stock would be equal to the percentage of the outstanding shares of common stock held by public stockholders immediately prior to the second-step conversion.

As set forth in the plan of reorganization, the percentage of the to-be-outstanding shares of the resulting entity issued in exchange for public shares would be adjusted to reflect the aggregate amount of dividends waived by Westborough Bancorp, MHC, if any, and the market value of the assets of Westborough Bancorp, MHC, other than common stock of Westborough Financial Services. Pursuant to this adjustment, the percentage of the to-be outstanding shares of the resulting entity issued to public stockholders in exchange for their minority shares (the "Adjusted Minority Ownership Percentage") is equal to the percentage of the outstanding shares of common stock held by public stockholders multiplied by the dividend waiver fraction. The dividend waiver fraction is equal to the product of:

- a fraction, of which the numerator is equal to Westborough Financial Services' stockholders' equity at the time of the second-step conversion less the aggregate amount of dividends waived by Westborough Bancorp, MHC, and the denominator is equal to Westborough Financial Services' stockholders' equity at the time of the second-step conversion, and

- a fraction, of which the numerator is equal to the appraised pro forma market value of the resulting entity in the second-step conversion minus the value of Westborough Bancorp, MHC's assets other than common stock and the denominator is equal to the appraised pro forma market value of the resulting entity in the second-step conversion.

RESTRICTIONS ON ACQUISITION OF WESTBOROUGH FINANCIAL SERVICES
AND WESTBOROUGH SAVINGS

GENERAL

The plan of reorganization provides for the reorganization of Westborough Savings in which a mutual holding company and stock holding company are formed, and Westborough Savings is reorganized from the mutual to the stock form of organization. See "The Reorganization and The Offering--General." Certain provisions in Westborough Financial Services' Articles of Organization and Bylaws and in its benefit plans and agreements entered into in connection with the reorganization, together with provisions of the Massachusetts General Laws ("MGL") and certain governing regulatory restrictions, may have anti-takeover effects.

MUTUAL HOLDING COMPANY STRUCTURE

The mutual holding company structure will restrict the ability of our stockholders to effect a change of control of management because, as long as Westborough Bancorp, MHC remains in existence as a mutual holding company, it will control a majority of our voting stock. Moreover, the trustees of Westborough Bancorp, MHC will be the directors of Westborough Financial Services and Westborough Bank. Westborough Bancorp, MHC will be able to elect all of the members of the Board of Directors of Westborough Financial Services and, as a general matter, will be able to control the outcome of most matters presented to the stockholders of Westborough Financial Services for vote. Therefore, a change in control of Westborough Financ