AMENDMENT NO. 3 TO
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                      AMENDED AND RESTATED RIGHTS AGREEMENT
                      -------------------------------------

Amendment No. 3, dated as of July 24, 2003  ("Amendment No. 3"), between Central
Bancorp,  Inc., a Massachusetts  corporation (the  "Company"),  and Register and
Transfer  Company as rights agent (the "Rights Agent").  Capitalized  terms used
and not otherwise defined herein shall have the meanings ascribed thereto in the
Rights Agreement referenced below.

          WHEREAS,  the  Company  and the  Rights  Agent  entered  into a Rights
Agreement,  dated as of October 11, 2001 (as restated  and amended to date,  the
"Rights Agreement"); and

          WHEREAS,  the  Company  desires  to  amend  the  Rights  Agreement  in
accordance with Section 5.4.

          NOW, THEREFORE, in consideration of the premises and mutual agreements
set forth in the Rights  Agreement and this  Amendment No. 3, the parties hereby
agree as follows:

     1. Definition of Acquiring Person. The definition of "Acquiring Person" set
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forth in Section 1.1 of the Rights Agreement shall be revised in its entirety to
read as follows:

     "Acquiring  Person" shall mean any Person who is a Beneficial  Owner of 10%
or  more  of the  outstanding  shares  of the  Common  Stock.  In  addition,  an
"Acquiring Person" shall include:

          (i) Any present or future interested stockholder (as defined by M.G.L.
Chapter 110F) or filer of a Schedule 13G (as referenced in such Chapter 110F) or
a Schedule  13D with  respect to shares of Common  Stock who,  without the prior
approval of the Board of  Directors  of the Company:  (a)  increases,  after the
later of the date of this  amendment  and the date on which  such  Person  first
became an interested  stockholder or first filed a Schedule 13G or Schedule 13D,
its  beneficial  ownership  of  Common  Stock  by one  percent  or  more  of the
outstanding Common Stock within any twelve month period; or (b) takes, after the
date of this amendment and during the three year period  following the date such
Person first became an interested  stockholder or a Schedule 13G or Schedule 13D
filer,  any public  action  which,  in the good faith  judgment  of the Board of
Directors,  has the purpose or effect of advocating that the Company pursue,  or
otherwise  seeking to cause the Company to pursue, a potential sale, unless such
Person has made a bona fide  proposal  to effect a business  combination  of the
Company  with such Person or with  another  entity  compliant  with such Chapter
110F.

          (ii) Jewelcor  Management,  Inc. and any Affiliate thereof,  if, after
the date of this  amendment and prior to May 7, 2006,  any such Person,  without
the prior
<PAGE>

approval of the Board of Directors of the Company:  (a) increases its beneficial
ownership  of Common  Stock by more than one percent of the  outstanding  Common
Stock within any twelve month period; or (b) takes any action which, in the good
faith  judgment  of the  Board  of  Directors,  has the  purpose  or  effect  of
influencing  control of the  Company,  unless  such  Person has made a bona fide
proposal  to effect a  business  combination  of the  Company  with such  Person
compliant with such Chapter 110F.

          Notwithstanding  the foregoing,  the term "Acquiring Person" shall not
include:

          (i) any Person who would  otherwise  have become an  Acquiring  Person
solely as a result of an  acquisition  by the Company of shares of Common Stock,
until such time  thereafter  as such Person  shall become the  Beneficial  Owner
(other  than by means of a stock  dividend  or stock  split)  of any  additional
shares of Common Stock; or

          (ii) any Person who would  otherwise  have become an Acquiring  Person
solely as a result of  purchasing  the Common  Stock  directly  from the Company
pursuant to a written agreement with the Company; or

          (iii) the Company,  a wholly owned  Subsidiary of the Company,  or any
employee  stock  ownership  or other  employee  benefit plan of the Company or a
wholly owned  Subsidiary  of the Company,  or any employee  stock  benefit trust
established  by the  Company or a wholly  owned  subsidiary  of the  Company (an
"Employee Plan Trust"); or

          (iv) John D. Doherty and his Affiliates  and Associates  provided that
he does not become the Beneficial Owner of 20% or more of the outstanding shares
of the Common Stock.

     2. Full Force and Effect. This Amendment No. 3 shall be effective as of the
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date hereof.  Except as expressly  amended  hereby,  the Rights  Agreement shall
remain in full force and effect and shall be otherwise unaffected hereby.

     3.  Governing  Law.  This  Amendment No. 3 shall be deemed to be a contract
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made under the laws of the  Commonwealth of  Massachusetts  and for all purposes
shall  be  governed  by and  construed  in  accordance  with  the  laws  of such
Commonwealth  applicable to contracts to be made and performed  entirely  within
such Commonwealth.

     4.  Counterparts.  This  Amendment  No. 3 may be  executed in any number of
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counterparts and each of such  counterparts  shall for all purposes be deemed to
be an original,  and all such counterparts shall together constitute but one and
the same instrument.

                         (signatures on following page)

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<PAGE>


     IN WITNESS  WHEREOF,  the  Company  and the Rights  Agent have  caused this
Amendment No. 3 to be duly executed as of the day and year first above written.

                              CENTRAL BANCORP, INC.


                              By:/s/ John D. Doherty
                                 ------------------------------------
                                 Name:  John D. Doherty
                                 Title: Chairman, President and Chief
                                           Executive Officer


                              REGISTRAR AND TRANSFER COMPANY


                              By:/s/ William P. Tatler
                                 ------------------------------------
                                 Name:  William P. Tatler
                                 Title: Vice President



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