<PAGE>

                                                                    Exhibit 10.3


                    SECOND AMENDMENT TO EMPLOYMENT AGREEMENT
                    ----------------------------------------


     THIS AGREEMENT is entered into this 8/th/ day of June, 1995, by between
Central Co-operative Bank, Somerville, Massachusetts (the "Bank") and John D.
Doherty (the "Employee").


     WHEREAS, the parties have previously entered into an employment agreement
(the "Agreement") dated October 24, 1986 providing for the employment of the
Employee as the President of the Bank, which Agreement was amended on March 31,
1992; and

     WHEREAS, the parties now desire by this writing to amend paragraph 11 of
the Agreement as set forth herein.


     NOW, THEREFORE, it is AGREED as follows:

     1.   Section 11 of the Agreement is amended by deleting the same in its
entirety and replacing said Section 11 with the following:

11.  Change in Control
     -----------------

          (a) Notwithstanding any provision herein to the contrary, if the
Employee's employment is terminated by the Bank, without the Employee's prior
written consent, in connection with or within three (3) years after any change
in control (as herein defined) of the Bank, the Employee shall be paid an amount
equal to the difference between (i) the product of 2.99 times his "base amount"
as defined in Section 280G(b) (3) of the Internal Revenue Code of 1986, as
amended (the "Code") and regulations promulgated thereunder, and (ii) the sum of
any other parachute payments (as defined under Section 280G(b) (2) of the Code)
that the Employee receives on account of the change in control.  Said sum shall
be paid in one lump sum within ten (10) days after such termination.  The term
"change in control" shall mean (1) the ownership, holding or power to vote more
than 25% of the Bank's voting stock, (2) the control of the election of a
majority of the Bank's directors, (3) the exercise of a controlling influence
over the management or policies of the Bank by any person or by persons acting
as a "group" (within the meaning of Section 13(d) of the Securities Exchange Act
of 1934), or (4) during any period of two consecutive years, individuals who at
the beginning of such period constitute the Board of Directors of the Bank (the
"Company Board") (the "Continuing Directors") cease for any reason to constitute
at least two-thirds thereof, provided that any individual whose election or
nomination for election as a member of the Company Board was approved by a vote
of at least two-thirds of the Continuing Directors then in office shall be
considered a Continuing Director. Directors then in office shall be considered a
Continuing Director. The term "person" means an individual other than the
Employee, or a corporation, partnership, trust, association, joint venture,
pool, syndicate, sole proprietorship, unincorporated organization or any other
form or entity not specifically listed herein.
<PAGE>

          (b) Notwithstanding any other provision herein to the contrary, the
Employee may voluntarily terminate his employment under this Agreement within
three (3) years following a change in control of the Bank, and the Employee
shall thereupon be entitled to receive the payment described in Section 1(a) of
this Agreement, upon the occurrence of any of the following events, or within
ninety (90) days thereafter, which have not been consented to in advance by the
Employee in writing: (i) the requirement that the Employee perform his principal
executive functions, more than 35 miles from his primary office as of the
Effective Date of this Agreement; (ii) a reduction in the Employee's base
compensation as in effect immediately prior to the change in control; (iii) the
failure by the Bank to continue to provide the Employee with compensation and
benefits substantially similar to those provided to him at the time of the
change in control under any of the employee benefit plans in which the Employee
becomes a participant, or the taking of any action by the Bank which would
directly or indirectly reduce any of such benefits or deprive the Employee of
any material fringe benefit enjoyed by him at the time of the change in control;
(iv) the assignment to the Employee of material duties and responsibilities
other than those normally associated with his position as referenced in the
recitals above; or (v) a material diminution or reduction in the Employee's
responsibilities or authority (including reporting responsibilities) in
connection with his employment with the Bank.

          (c) The Employee shall not be required to mitigate the amount of any
payment provided for in this Agreement by seeking other employment or otherwise
and no such payment shall be offset or reduced by the amount of any compensation
or benefits provided to the Employee in any subsequent employment.

          (d) In the event that any dispute arises between the Employee and the
Bank as to the terms or interpretation of this Agreement, whether instituted by
formal legal proceedings or otherwise, including any action that the Employee
takes to enforce the terms of this Agreement or to defend against any action
taken by the Bank, the Employee shall be reimbursed for all costs and expenses,
including reasonable attorneys' fees, arising from such dispute, proceedings or
actions. Such reimbursement shall be paid within ten (10) days after the
Employee furnishes to the Bank written evidence, which may be in the form, among
other things, of a cancelled check or receipt, or any costs or expenses incurred
by the Employee.

          (e) Any payments made to the Employee under this Agreement are subject
to and conditioned upon their compliance with 12 U.S.C. Section 1828(k) and any
regulations promulgated thereunder.

     2.   Nothing contained herein shall be held to alter, vary or affect any of
the terms, provisions, or conditions or the Agreement other than as stated
above.
<PAGE>

     IN WITNESS WHEREOF, the undersigned have executed this Second Amendment to
the Agreement on the day and year first written above.


ATTEST:                             CENTRAL CO-OPERATIVE BANK



_______________________________     By: /s/ Burton F. Faulkner, Jr.
                                        -------------------------------------

                                        Chairman of the Finance
                                        Committee


WITNESS:


/s/ Gladys N. Partamian            By: /s/ John D. Doherty
-------------------------------        --------------------------------------
                                       John D. Doherty