EMPLOYMENT AGREEMENT

     This EMPLOYMENT  AGREEMENT (the "Agreement") is entered into as of the 20th
day of January,  2009 (the "Effective Date"), by and between EAST BOSTON SAVINGS
BANK, a bank organized under the laws of the Commonwealth of Massachusetts  with
its headquarters located in East Boston, Massachusetts (the "Bank"), and Deborah
J. Jackson (the "Executive").

                                   WITNESSETH

     WHEREAS,  the Bank wishes to provide for the  employment by the Bank of the
Executive as of the Effective  Date, and the Executive  wishes to serve the Bank
as of the  Effective  Date,  on the  terms  and  conditions  set  forth  in this
Agreement; and

     WHEREAS,  in order to induce the  Executive to accept  employment  with the
Bank,  the parties  desire to specify the severance  benefits which shall be due
the Executive by the Employers in the event that her employment with the Bank is
terminated under specified circumstances;

     NOW THEREFORE,  in consideration of the mutual agreements herein contained,
and upon the other terms and conditions hereinafter provided, the parties hereby
agree as follows:

     1.  Employment.  The Bank agrees to employ the  Executive and the Executive
agrees to be employed by the Bank on the terms and  conditions set forth in this
Agreement.

     2.  Duties and  Responsibilities.  The  Executive  shall  serve the Bank as
President  and Chief  Operating  Officer of the Bank and shall  serve  under the
direction of the Board of Directors of the Bank (the "Board of  Directors")  and
under the direction of and report to the Chief Executive Officer of the Bank. On
the ninth (9th) month  following the  Effective  Date,  the  Executive  shall be
appointed  to the  Board of  Directors,  subject  to any  applicable  regulatory
stockholder approval, and the Executive shall be invited to attend all executive
committee  meetings by the Chief  Executive  Officer of the Bank during the nine
(9) month period during which the  Executive  has not yet been  appointed to the
Board of  Directors.  The  Executive  shall  also  serve the Bank in  additional
services,  duties and  responsibilities as the Executive may be requested by the
Chief Executive  Officer or Board of Directors.  In such capacity or capacities,
the Executive  shall  perform such  services and duties in  connection  with the
business,  affairs and operations of the Bank as may be assigned or delegated to
the Executive from time to time by or under the authority of the Chief Executive
Officer or Board of Directors,  and the  Executive  shall adhere to all policies
established by the Board of Directors or Committees thereof at all times.

     3. Term.

          (a)  The  term of  this  Agreement  shall  be (i)  the  initial  term,
     consisting of the period commencing on the Effective Date and ending on the
     second  anniversary of the Effective Date, plus (ii) any and all extensions
     of the  initial  term made  pursuant  to this  Section  3. The  Executive's
     rendering of services  pursuant to this Agreement will commence on or about
     March

<PAGE>

     1, 2009,  or at an earlier date as may be mutually  agreed upon.  The exact
     date  services  will  commence  will  be  dependent  upon  the  Executive's
     completion of services to her current employer.

          (b) The term of this Agreement  shall be extended for one day each day
     so that a constant  twenty-four  (24)  calendar  month term shall remain in
     effect,  until such time as the Board of Directors or the Executive  elects
     not to extend the term of the  Agreement  by giving  written  notice to the
     other party in accordance with the terms of this  Agreement,  in which case
     the term of this  Agreement  shall be fixed  and  shall  end on the  second
     anniversary of the date of such written notice.

     4. Compensation and Benefits. The regular compensation and benefits payable
to the Executive under this Agreement shall be as follows:

          (a) Salary.  For all  services  rendered by the  Executive  under this
     Agreement,  the Bank shall pay the Executive a salary (the "Salary") at the
     annual  rate of  $285,000,  subject  to  increase  from time to time in the
     discretion  of the Board of  Directors.  The  Salary  shall be  payable  in
     periodic  installments in accordance with the Bank's usual practice for its
     senior executives.

          (b) Bonus. The Executive shall be entitled to participate in an annual
     incentive program  established by the Board of Directors with such terms as
     may be established in the sole discretion of the Board of Directors.

          (c)  Regular  Benefits.  The  Executive  shall  also  be  entitled  to
     participate in any employee benefit plans,  medical  insurance plans,  life
     insurance plans, disability income plans, retirement plans, vacation plans,
     expense  reimbursement  plans  and  other  benefit  plans  or  credit  card
     privileges  which the Bank may from  time to time  have in  effect  for its
     senior executives.  Such participation shall be subject to the terms of the
     applicable  plan  documents,  generally  applicable  policies  of the Bank,
     applicable  law  and  the  discretion  of the  Board  of  Directors  or any
     administrative  or other  committee  provided for in or contemplated by any
     such plan. Nothing contained in this Agreement shall be construed to create
     any  obligation  on the part of the Bank to  establish  any such plan or to
     maintain  the  effectiveness  of any such plan which may be in effect  from
     time to time.

          (d) Taxation of Payments  and  Benefits.  The Bank shall  undertake to
     make deductions,  withholdings and tax reports with respect to payments and
     benefits  under this Agreement to the extent that it reasonably and in good
     faith  believes that it is required to make such  deductions,  withholdings
     and tax reports.  Payments under this Agreement  shall be in amounts net of
     any such  deductions or  withholdings.  Nothing in this Agreement  shall be
     construed  to  require  the Bank to make any  payments  to  compensate  the
     Executive  for any  adverse  tax effect  associated  with any  payments  or
     benefits or for any deduction or withholding from any payment or benefit.

          (e)  Exclusivity  of Salary and Benefits.  The Executive  shall not be
     entitled to any payments or benefits  other than those  provided under this
     Agreement.


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<PAGE>

          (f) SERP.  The  Executive  shall enter into a  supplemental  executive
     retirement plan concurrent with signing this Agreement.

          (g)  Restricted  Stock.  The parties  hereto agree that the  Executive
     shall,  within  30 days of the  Effective  Date,  receive a grant of 10,000
     restricted  stock awards subject to a 5 year vesting  schedule (which shall
     be time based,  and not subject to performance  based vesting,  and contain
     the same terms and conditions as the restricted  stock award agreement that
     was issued to certain  employees  on October 13,  2008) and pursuant to the
     terms and conditions of the Bank's Equity Incentive Plan.

          (h) Stock Options.  The parties hereto agree that the Executive shall,
     within 30 days of the  Effective  Date,  receive  a grant of  50,000  stock
     options subject to a 5 year vesting  schedule and pursuant to the terms and
     conditions of the Bank's Equity Incentive Plan. The options shall be issued
     at an exercise  price  equal to the fair  market  value of the stock at the
     date of grant and  contain a term of ten years from the date of grant.  The
     terms of the vesting will be no less  favorable to the Executive than those
     terms contained in this Employment Agreement.

     5.  Extent  of  Service.  During  the  Executive's  employment  under  this
Agreement,  the Executive shall, subject to the direction and supervision of the
Board of Directors,  devote the Executive's full business time, best efforts and
business  judgment,  skill  and  knowledge  to the  advancement  of  the  Bank's
interests and to the discharge of the  Executive's  duties and  responsibilities
under this  Agreement.  The  Executive  shall not  engage in any other  business
activity,  except as may be approved by the Board of  Directors;  provided  that
nothing in this Agreement shall be construed as preventing the Executive from:

          (a) investing the Executive's assets in any company or other entity in
     a manner not prohibited by Section 9(d) and in such form or manner as shall
     not require any material  activities on the Executive's  part in connection
     with the  operations or affairs of the companies or other entities in which
     such investments are made;

          (b) engaging in religious, charitable or other community or non-profit
     activities  that do not impair  the  Executive's  ability  to  fulfill  the
     Executive's duties and responsibilities under this Agreement; or

          (c)  conducting  bookkeeping  and other  services  for  family-related
     businesses.

     6.  Termination.  The  Executive's  employment  under this Agreement  shall
terminate under the following circumstances set forth in this Section 6.

          (a)  Termination  by the Bank for Cause.  The  Executive's  employment
     under this Agreement may be terminated for Cause without further  liability
     on the part of the Bank effective  immediately  upon a vote of the Board of
     Directors and written  notice to the  Executive.  Only the following  shall
     constitute "Cause" for such termination:


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<PAGE>

               (i) the  conviction  of the  Executive  for any felony  involving
          deceit, dishonesty or fraud;

               (ii) a material act or acts of dishonesty in connection  with the
          performance of the Executive's  duties,  including without limitation,
          material misappropriation of funds or property;

               (iii) an act or acts of gross misconduct by the Executive; or

               (iv)  continued,  willful and deliberate  non-performance  by the
          Executive  of duties  (other than by reason of illness or  disability)
          which has continued for more than 30 days following  written notice of
          non-performance  from the Board of Directors (or Executive  Committee)
          which specifically describes the alleged non-performance.

A determination  of whether the Executive's  employment  shall be terminated for
Cause shall be made at a meeting of the Board of  Directors  called and held for
such purpose,  at which the Board of Directors  makes a finding that in the good
faith  opinion of the Board of Directors an event set forth in  subclauses  (i),
(ii),  (iii) or (iv) has  occurred and  specifying  the  particulars  thereof in
detail.

          (b)  Termination by the Executive.  The Executive's  employment  under
     this  Agreement may be terminated by the Executive by written notice to the
     Board of Directors  within sixty (60) days following an event  constituting
     "Good  Reason." The  Executive's  termination  of  employment  shall become
     effective on the  thirty-first  (31st) day following such notice,  provided
     the Bank has not remedied the  condition  giving rise to the event of "Good
     Reason." For purposes of this Agreement, "Good Reason" shall mean:

               (i) a material  diminution or other  substantial  adverse change,
          not  consented  to by  Executive,  in  the  nature  or  scope  of  the
          Executive's  responsibilities  and  authorities  as set  forth in this
          Agreement;

               (ii) any  demotion of the  Executive  from her  current  title of
          President and Chief Operating Officer;

               (iii) a material  reduction in the Executive's base salary except
          for   across-the-board   reductions   similarly   affecting   all   or
          substantially all officers;

               (iv)  involuntary  relocation of the Bank's  offices in which the
          Executive is  principally  employed by more than 50 miles (10 miles in
          the event of a Change in Control); or

               (v)  failure of the Bank to comply  with  material  terms of this
          Agreement.


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<PAGE>

          (c) Termination by the Bank Without Cause. The Executive's  employment
     under this  Agreement  may be  terminated by the Bank without Cause (which,
     for  purposes  of  clarification,   shall  not  include  a  termination  of
     Executive's  employment  under this Agreement due to  Executive's  death or
     Disability)  upon  written  notice to the  Executive.  A  determination  of
     whether the Executive's  employment shall be terminated  without Cause will
     be made solely by the Executive Committee of the Board of Directors.

          (d) Disability.  If the Executive shall be disabled so as to be unable
     to  perform  the  essential  functions  of the  Executive's  then  existing
     position  or  positions  under this  Agreement  with or without  reasonable
     accommodation,  for a total of more than 90 days in any calendar  year, the
     Board of Directors may terminate the  Executive's  employment  upon written
     notice to the  Executive.  If any question shall arise as to whether during
     any period the  Executive  is  disabled  so as to be unable to perform  the
     essential  functions of the Executive's then existing position or positions
     with or without  reasonable  accommodation,  the Executive  may, and at the
     request of the Bank shall, submit to the Bank a certification in reasonable
     detail by a  physician  selected by the Bank to whom the  Executive  or the
     Executive's  guardian  has  no  reasonable  objection  as  to  whether  the
     Executive is so disabled,  and such certification shall for the purposes of
     this  Agreement  be  conclusive  of  the  issue.  The  physician  shall  be
     board-certified  in the  area  of  medicine  applicable  to the  particular
     disability  involved.  The Executive  shall  cooperate  with any reasonable
     request of the physician in  connection  with such  certification.  If such
     question  shall  arise  and  the  Executive   shall  fail  to  submit  such
     certification  (unless the failure  results from matters beyond the control
     of the  Executive),  the Bank's  determination  will determine the issue of
     whether the  Executive is  disabled.  Nothing in this Section 6(d) shall be
     construed  to waive the  Executive's  rights,  if any,  under  existing law
     including, without limitation; the Family and Medical Leave Act of 1993, 29
     U.S.C.  ss.2601 et seq.,  the Americans  with  Disabilities  Act, 42 U.S.C.
     ss.12101 et seq,  Massachusetts  General Laws Chapter 151B,  and Section 10
     below.

          (e) Death. The Executive's  employment  hereunder shall terminate upon
     her death.

          (f) Termination  and Board  Membership.  To the extent  Executive is a
     member  of the board of  directors  or  trustees  of the Bank or any of its
     affiliates on the date of  termination  of employment  with the Bank (other
     than a termination  due to normal  retirement),  Executive will resign from
     all of the boards of directors  and  trustees  immediately  following  such
     termination  of employment  with the Bank.  Executive  will be obligated to
     tender this  resignation  regardless of the method or manner of termination
     (other than  termination due to normal  retirement),  and such  resignation
     will not be conditioned upon any event or payment.

     7. Certain Compensation Upon Termination.

          (a) Compensation  Upon Voluntary  Termination.  If the Executive shall
     resign  (including by  retirement)  and  voluntarily  terminate  employment
     without Good Reason,  the Bank shall pay to the Executive  the  Executive's
     accrued and unpaid salary,  accrued and unpaid  vacation pay and all rights
     and benefits  that the  Executive is entitled to receive under the terms of
     the Bank's benefit plans or arrangements,  including the Executive's rights
     under any


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<PAGE>

     Supplemental  Executive  Retirement Plan and vested stock options in effect
     between the Bank and the Executive (the "Accrued Obligations").

          (b) Compensation  Upon Death. In the event the Executive's  employment
     shall terminate in the event of her death,  her surviving spouse (or estate
     if there is no surviving  spouse)  shall be entitled to receive the Accrued
     Obligations,  including a pro-rata bonus through the date of her death. Her
     surviving spouse (or estate if there is no surviving  spouse) shall also be
     entitled to any death  benefit  provided  under the Bank's  life  insurance
     plans.

          (c)  Compensation  Upon  Disability.  In  the  event  the  Executive's
     employment  shall  terminate by reason of disability as provided in Section
     6(d) above, she shall be entitled to her Accrued  Obligations,  including a
     pro-rata  bonus  through the date of her  disability,  and such  disability
     benefits as determined in accordance with any short or long-term disability
     plans then in effect for executives of the Bank.

          (d) Compensation  Upon Termination by the Bank for Cause. In the event
     the  Executive's  employment  shall be  terminated by the Bank for Cause as
     provided  by Section  6(a)  above,  she shall be  entitled  to receive  her
     Accrued Obligations only.

          (e) Compensation  Upon Termination of the Bank Without Cause or by the
     Executive for Good Reason. In the event the Executive's employment shall be
     terminated by the Bank without Cause as provided in Section 6(c) above,  or
     by the  Executive  for Good Reason as provided in Section  6(b) above,  she
     shall be entitled to receive the Accrued Obligations.  In addition, subject
     to the Executive's  agreement to a release of any and all legal claims in a
     form  satisfactory  to the  Bank  and  the  expiration  of  the  applicable
     revocation  period and subject to compliance with the provisions of Section
     9 hereof,  the Bank shall pay the Executive an amount equivalent to the sum
     of (i) two (2)  times  the  Executive's  Salary  at the rate then in effect
     pursuant  to  Section  4(a);  and (ii) the  value of 24  months  of  health
     insurance  premiums  for health  insurance  coverage  provided by the Bank,
     based on the coverage  provided to the Executive  immediately  prior to her
     termination.  The Bank  shall make this in a single  lump sum cash  payment
     within ten (10) days following the termination of employment.

          (f)   Involuntary    Termination   by   Bank   Within   Nine   Months.
     Notwithstanding  anything in this  Agreement to the contrary,  in the event
     that on or before the nine month anniversary of the Effective Date the Bank
     terminates the Executive for any reason other than Cause,  then, in lieu of
     any other benefit under this Agreement  including the benefit  described in
     Section 7(e), the Bank shall (i) pay to the Executive her  compensation and
     vested rights and benefits to the date of her termination,  and (ii) pay to
     the  Executive a single lump sum payment in the amount of $285,000,  within
     ten (10) days following the date of termination.  Following her termination
     from employment  under this Section 7(f),  Executive will not be subject to
     the   restrictions  set  forth  in  Sections  9(d)(i)  of  this  Agreement.
     Notwithstanding the foregoing, this Section 7(f) shall not be applicable if
     the  termination  of  employment  occurs  concurrently  with or following a
     Change in Control.

          (g) If the Executive is a "specified employee" (as defined below) of a
     publicly traded company, the payments pursuant to this Agreement, including
     Sections  7(e) and 7(f),  may


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<PAGE>
     be delayed and paid to the  Executive on the first day of the seventh month
     following  termination  of  employment  if required to avoid  penalty under
     Section 409A of the Internal  Revenue Code  ("Code").  For purposes of this
     Agreement, the Executive shall not have a "termination of employment" until
     she has a "separation from service" within the meaning of Code Section 409A
     and the  regulations  promulgated  thereunder.  Also for  purposes  of this
     Agreement,  Executive  is a  specified  employee  if  Executive  is a  "key
     employee"  within the meaning of Code  Section  416(i)  (without  regard to
     paragraph (i) thereof).

     8. Termination in Connection with a Change in Control.

          (a) For  purposes of this  Agreement,  a "Change in  Control"  means a
     change in control of the Bank or Meridian  Interstate  Bancorp,  Inc.  (the
     "Company") as defined in Section 409A of the Internal  Revenue Code of 1986
     (the "Code"), as amended, and rules,  regulations,  and guidance of general
     application thereunder, including the following:

               i. Change in ownership:  A change in ownership of the Bank or the
          Company  occurs  on the  date  any one  person  or  group  of  persons
          accumulates  ownership of more than 50% of the total fair market value
          or total voting power of the Bank or the Company; or

               ii. Change in effective  control:  A change in effective  control
          occurs when  either (i) any one person or more than one person  acting
          as a group acquires within a 12-month period ownership of stock of the
          Company  possessing  30% or  more of the  total  voting  power  of the
          Company;  or (ii) a  majority  of the  Bank's  or  Company's  Board of
          Directors is replaced  during any 12-month  period by Directors  whose
          appointment  or election  is not  endorsed in advance by a majority of
          the Bank's or Company's Board of Directors (as applicable), or

               iii.  Change in ownership of a substantial  portion of assets:  A
          change in the  ownership  of a  substantial  portion of the  Company's
          assets  occurs if, in a 12 month  period,  any one person or more than
          one person acting as a group acquires assets from the Company having a
          total gross fair market value equal to or  exceeding  40% of the total
          gross fair market value of the  Company's  entire  assets  immediately
          before the acquisition or acquisitions.  For this purpose, "gross fair
          market value" means the value of the Company's assets, or the value of
          the  assets  being  disposed  of,  determined  without  regard  to any
          liabilities associated with the assets.

     Notwithstanding  anything in this  Agreement to the  contrary,  in no event
shall a reorganization of Meridian Financial Services, Incorporated, the Company
or Bank solely within its corporate  structure  constitute a "Change in Control"
for purposes of this Agreement.

          (b)  Termination.  If within the period ending one year after a Change
     in Control,  (i) the Bank  terminates the  Executive's  employment  without
     Cause,  or (ii) the Executive  voluntarily  terminates her employment  with
     Good  Reason,  the  Bank  will,  within  ten  (10)  calendar  days  of  the
     termination of the Executive's employment,  make a lump-sum cash payment to
     her equal to 2.99 times her "base  amount"  (as  defined  for  purposes  of
     Section  280G of the Code)  less any other  "parachute  payments"  (as also
     defined for  purposes of Section  280G


                                       7

<PAGE>

     of the Code)  made to the  Executive.  The cash  payment  made  under  this
     Section  8(b)  shall be made in lieu of any  payment  also  required  under
     Section 7 of this  Agreement  because  of the  Executive's  termination  of
     employment. For purposes of this Section 8(b), the Executive shall not have
     a  "termination  of employment"  until she has a "separation  from service"
     within the meaning of Section  409A of the Internal  Revenue Code  ("Code")
     and the regulations promulgated thereunder.

          (c) The  provisions of Section 9,  including the defined terms used in
     such  sections,  shall continue in effect until the later of the expiration
     of this  Agreement  or one year  following a Change in Control,  except the
     non-compete provisions in Section 9(d) shall not be applicable in the event
     of a Change in Control.

          (d)  Limitation  of  Benefits  Under  Certain  Circumstances.  If  the
     payments and benefits pursuant to this Section 8 of this Agreement,  either
     alone or together  with other  payments and benefits the  Executive has the
     right to receive from the Bank,  would  constitute  a  "parachute  payment"
     under Section 280G of the Code,  the payments and benefits shall be reduced
     or revised, by the amount, if any, which is the minimum necessary to result
     in no  portion  of the  payments  and  benefits  under  this  Agreement  or
     otherwise being  non-deductible to the Bank pursuant to Section 280G of the
     Code and subject to the excise tax imposed  under Section 4999 of the Code.
     The  reduction  will be made in the  manner  determined  by the  Executive,
     unless  it  is  determined  that  permitting  the  Executive  to  make  the
     determination  would violate Code Section 409A. In such case, the reduction
     will be made  first  from the cash  severance  payment  payable  under this
     Section 8. The Bank's  independent  public  accountants  will determine any
     reduction  in the  payments  and  benefits  to be  made  pursuant  to  this
     Agreement or otherwise;  the Bank will pay for the accountant's opinion. If
     the Bank and/or the Executive do not agree with the  accountant's  opinion,
     the Bank will pay to the  Executive  the  maximum  amount of  payments  and
     benefits pursuant to this Section 8, as selected by the Executive, that the
     opinion  indicates  have  a high  probability  of  not  causing  any of the
     payments and benefits to be  non-deductible  to the Bank and subject to the
     excise  tax  imposed  under  Section  4999 of the  Code.  The Bank may also
     request, and the Executive has the right to demand that the Bank request, a
     ruling from the Internal Revenue Service ("IRS") as to whether the disputed
     payments   and   benefits   pursuant  to  this  Section  8  have  such  tax
     consequences.  The Bank will  promptly  prepare  and file the request for a
     ruling from the IRS,  but in no event will the Bank make this filing  later
     than thirty (30) days from the date of the accountant's opinion referred to
     above.  The request will be subject to the  Executive's  approval  prior to
     filing;  the Executive shall not  unreasonably  withhold her approval.  The
     Bank and the  Executive  agree to be bound by any ruling  received from the
     IRS and to make  appropriate  payments  to each  other to  reflect  any IRS
     rulings, together with interest at the applicable federal rate provided for
     in Section  7872(f)(2)  of the Code.  Nothing  contained in this  Agreement
     shall  result in a  reduction  of any  payments  or  benefits  to which the
     Executive  may be  entitled  upon  termination  of  employment  other  than
     pursuant to this  Section 8, or a reduction  in the  payments  and benefits
     specified in this Section 8, below zero.


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<PAGE>


     9. Confidential Information, Noncompetition and Cooperation.

          (a) Confidential Information. As used in this Agreement, "Confidential
     Information"  means information  belonging to the Bank which is of value to
     the Bank in the course of  conducting  its business and the  disclosure  of
     which could  result in a  competitive  or other  disadvantage  to the Bank.
     Confidential   Information   includes,   without   limitation,    financial
     information,  reports,  and forecasts;  inventions,  improvements and other
     intellectual  property;  trade  secrets;  know-how;  designs,  processes or
     formulae;  software;  market or sales information or plans; customer lists;
     and  business  plans,   prospects  and  opportunities   (such  as  possible
     acquisitions or  dispositions of businesses or facilities)  which have been
     discussed  or  considered  by  the  management  of the  Bank.  Confidential
     Information includes  information  developed by the Executive in the course
     of the Executive's  employment by the Bank, as well as other information to
     which the  Executive  may have access in  connection  with the  Executive's
     employment.   Confidential   Information  also  includes  the  confidential
     information  of others  with  which the Bank has a  business  relationship.
     Notwithstanding  the foregoing,  Confidential  Information does not include
     information in the public domain,  unless due to breach of the  Executive's
     duties under Section 9(b).

          (b)  Confidentiality.  The Executive  understands  and agrees that the
     Executive's  employment  creates a  relationship  of  confidence  and trust
     between  the  Executive  and the  Bank  with  respect  to all  Confidential
     Information.  At all times, both during the Executive's employment with the
     Bank and after its  termination,  the Executive will keep in confidence and
     trust all such Confidential  Information,  and will not use or disclose any
     such  Confidential  Information  without the  written  consent of the Bank,
     except  as may be  necessary  in the  ordinary  course  of  performing  the
     Executive's duties to the Bank.

          (c) Documents,  Records, etc. All documents, records, data, apparatus,
     equipment  and  other  physical  property,  whether  or not  pertaining  to
     Confidential Information,  which are furnished to the Executive by the Bank
     or are  produced  by the  Executive  in  connection  with  the  Executive's
     employment  will be and remain the sole property of the Bank. The Executive
     will  return  to the Bank  all  such  materials  and  property  as and when
     requested by the Bank.  In any event,  the  Executive  will return all such
     materials and property  immediately  upon  termination  of the  Executive's
     employment for any reason. The Executive will not retain with the Executive
     any such material or property or any copies thereof after such termination.

          (d) Noncompetition and Nonsolicitation. During the period in which the
     Executive  is  employed by the Bank and for two (2) years  thereafter,  the
     Executive (i) will not, directly or indirectly,  whether as owner, partner,
     shareholder, consultant, agent, employee, co-venturer or otherwise, engage,
     participate,  assist or invest in any  Competing  Business (as  hereinafter
     defined);   (ii)  will  refrain  from  directly  or  indirectly  employing,
     attempting  to employ,  recruiting  or  otherwise  soliciting,  inducing or
     influencing  any  person  to leave  employment  with the Bank  (other  than
     terminations  of  employment  of  subordinate  employees  undertaken in the
     course of the Executive's employment with the Bank); and (iii) will refrain
     from  soliciting  or  encouraging  any customer or supplier to terminate or
     otherwise  modify  adversely its business  relationship  with the Bank. The
     Executive  understands that the restrictions set forth in this Section 9(d)
     are intended to protect the Bank's interest in its Confidential Information
     and


                                       9

<PAGE>

     established employee, customer and supplier relationships and goodwill, and
     agrees that such  restrictions  are  reasonable  and  appropriate  for this
     purpose.  For purposes of this  Agreement,  the term  "Competing  Business"
     shall mean a business conducted anywhere in Suffolk,  Middlesex,  Essex and
     Norfolk  Counties,  or within a 30-mile  radius of the Bank's  headquarters
     (other  than the State of New  Hampshire),  which is  competitive  with any
     business  which the Bank or any of its  affiliates  conducts or proposes to
     conduct at any time during the employment of the Executive. Notwithstanding
     the  foregoing,  the  Executive  may  own up to  one  percent  (1%)  of the
     outstanding  stock of a publicly held corporation  which  constitutes or is
     affiliated with a Competing Business.

          (e)  Litigation  and  Regulatory  Cooperation.  During  and  after the
     Executive's  employment,  the Executive shall cooperate fully with the Bank
     in the defense or  prosecution of any claims or actions now in existence or
     which may be brought  in the future  against or on behalf of the Bank which
     relate to events or  occurrences  that  transpired  while the Executive was
     employed by the Bank. The Executive's  full  cooperation in connection with
     such  claims  or  actions  shall  include,  but not be  limited  to,  being
     available to meet with counsel to prepare for discovery or trial and to act
     as a witness on behalf of the Bank at mutually convenient times. During and
     after the Executive's employment,  the Executive also shall cooperate fully
     with the  Bank in  connection  with  any  investigation  or  review  of any
     federal,  state or local regulatory  authority as any such investigation or
     review relates to events or occurrences that transpired while the Executive
     was employed by the Bank.  The Bank shall  reimburse  the Executive for any
     reasonable   out-of-pocket   expenses   incurred  in  connection  with  the
     Executive's performance of obligations pursuant to this Section 9(e).

          (f)  Injunction.  The  Executive  agrees that it would be difficult to
     measure any damages  caused to the Bank which might  result from any breach
     by the  Executive  of the promises set forth in this Section 9, and that in
     any event money damages would be an inadequate  remedy for any such breach.
     Accordingly,  subject to Section 10 of this Agreement, the Executive agrees
     that if the Executive breaches,  or proposes to breach, any portion of this
     Agreement,  the Bank shall be entitled,  in addition to all other  remedies
     that it may have, to an injunction or other appropriate equitable relief to
     restrain any such breach  without  showing or proving any actual  damage to
     the Bank.

     10.  Arbitration  of Disputes.  Any  controversy or claim arising out of or
relating to this Agreement or the breach thereof or otherwise arising out of the
Executive's employment or the termination of that employment (including, without
limitation,  any claims of unlawful employment  discrimination  whether based on
age or otherwise)  shall, to the fullest extent  permitted by law, be settled by
arbitration  in any forum and form agreed upon by the parties or, in the absence
of such an agreement, under the auspices of the American Arbitration Association
("AAA") in Boston,  Massachusetts  in  accordance  with the  Employment  Dispute
Resolution  Rules of the AAA,  including,  but not  limited  to,  the  rules and
procedures  applicable  to the selection of  arbitrators.  In the event that any
person or entity other than the Executive or the Bank may be a party with regard
to any such  controversy or claim,  such controversy or claim shall be submitted
to arbitration subject to such other person or entity's agreement. Judgment upon
the  award  rendered  by the  arbitrator  may be  entered  in any  court  having
jurisdiction  thereof.  This  Section  10  shall  be  specifically  enforceable.
Notwithstanding  the foregoing,  this


                                       10

<PAGE>

Section 10 shall not preclude  either party from pursuing a court action for the
sole  purpose  of  obtaining  a  temporary  restraining  order or a  preliminary
injunction in circumstances  in which such relief is appropriate;  provided that
any other relief shall be pursued through an arbitration  proceeding pursuant to
this  Section  10.  The  cost of all  arbitration  proceedings  (other  than the
Executive's legal fees, which are subject to section 15 of this Agreement) shall
be paid by the Bank.

     11.  Consent  to  Jurisdiction.  To the  extent  that any  court  action is
permitted  consistent  with or to  enforce  Section  10 of this  Agreement,  the
parties  hereby  consent  to the  jurisdiction  of  the  Superior  Court  of the
Commonwealth  of  Massachusetts  and the United  States  District  Court for the
District of Massachusetts.  Accordingly,  with respect to any such court action,
the  Executive  (a) submits to the personal  jurisdiction  of such  courts;  (b)
consents to service of process;  and (c) waives any other  requirement  (whether
imposed by  statute,  rule of court,  or  otherwise)  with  respect to  personal
jurisdiction or service of process.

     12.  Integration.  This Agreement  constitutes the entire agreement between
the parties with respect to the subject  matter hereof and  supersedes all prior
agreements between the parties with respect to any related subject matter.

     13.  Assignment;  Successors  and  Assigns,  etc.  Neither the Bank nor the
Executive may make any assignment of this Agreement or any interest  herein,  by
operation of law or otherwise,  without the prior  written  consent of the other
party; provided that the Bank may assign its rights under this Agreement without
the  consent  of the  Executive  in the  event  that  the  Bank  shall  effect a
reorganization,   consolidate   with  or  merge  into  any  other   corporation,
partnership,  organization or other entity, or transfer all or substantially all
of its properties or assets to any other corporation,  partnership, organization
or other  entity.  This  Agreement  shall inure to the benefit of and be binding
upon  the  Bank  and the  Executive,  their  respective  successors,  executors,
administrators, heirs and permitted assigns.

     14.  Enforceability.   If  any  portion  or  provision  of  this  Agreement
(including,  without limitation, any portion or provision of any section of this
Agreement)  shall to any extent be declared  illegal or unenforceable by a court
of  competent  jurisdiction,  then  the  remainder  of  this  Agreement,  or the
application of such portion or provision in circumstances other than those as to
which it is so declared illegal or unenforceable, shall not be affected thereby,
and each portion and provision of this Agreement  shall be valid and enforceable
to the fullest extent permitted by law.

     15. Payment of Legal Fees.  All  reasonable  legal fees paid or incurred by
the Executive pursuant to any dispute or question of interpretation  relating to
this Agreement shall be paid or reimbursed by the Bank, only if the Executive is
successful pursuant to a legal judgment, arbitration or settlement. Such payment
or  reimbursement  shall be made no later than two and one-half months after the
successful   conclusion  in  Executive's  favor  of  the  dispute  by  judgment,
arbitration or settlement.

     16.  Waiver.  No waiver of any provision  hereof shall be effective  unless
made in writing  and signed by the  waiving  party.  The failure of any party to
require the  performance  of


                                       11

<PAGE>

any term or  obligation  of this  Agreement,  or the  waiver by any party of any
breach of this Agreement,  shall not prevent any subsequent  enforcement of such
term or obligation or be deemed a waiver of any subsequent breach.

     17.  Notices.  Any  notices,  requests,  demands  and other  communications
provided for by this  Agreement  shall be sufficient if in writing and delivered
in person or sent by a nationally  recognized  overnight  courier  service or by
registered or certified mail, postage prepaid,  return receipt requested, to the
Executive at the last address the  Executive  has filed in writing with the Bank
or,  in the case of the Bank,  at its main  offices,  attention  of the Board of
Directors,  and  shall be  effective  on the date of  delivery  in  person or by
courier or three (3) days after the date mailed.

     18. Amendment.  This Agreement may be amended or modified only by a written
instrument  signed by the Executive and by a duly authorized  representative  of
the Bank.

     19. Governing Law. This is a Massachusetts  contract and shall be construed
under  and be  governed  in all  respects  by the  laws of the  Commonwealth  of
Massachusetts,  without giving effect to the conflict of laws principles of such
Commonwealth. With respect to any disputes concerning federal law, such disputes
shall be determined in accordance  with the law as it would be  interpreted  and
applied by the United States Court of Appeals for the First Circuit.

     20. Federal Deposit Insurance Act Compliance. All payments made by the Bank
to the Executive  under any provision of this Agreement  shall be subject to and
conditioned upon compliance with Section 18(k) of the Federal Deposit  Insurance
Act, 12 U.S.C. ss. 1828(k) and any regulations promulgated hereunder.

     21.  Counterparts.  This  Agreement  may  be  executed  in  any  number  of
counterparts,  each of which when so executed and delivered shall be taken to be
an original;  but such counterparts  shall together  constitute one and the same
document.


                                       12

<PAGE>



     IN WITNESS WHEREOF, this Agreement has been executed as a sealed instrument
by the Bank, by its duly  authorized  officer,  and by the Executive,  as of the
Effective Date.



                                     EAST BOSTON SAVINGS BANK



                                     By:   /s/ Richard J. Gavegnano
                                           -------------------------------------
                                           Richard J. Gavegnano
                                           Chairman and CEO

                                           EXECUTIVE


                                           /s/ Deborah J. Jackson
                                           -------------------------------------
                                           Deborah J. Jackson