Exhibit 10.3


FORM OF
 ESOP LOAN AGREEMENT


          THIS LOAN
AGREEMENT (“Loan Agreement”) is made and entered into as of
[DATE], by and between the EAST BOSTON SAVINGS BANK EMPLOYEE STOCK
OWNERSHIP PLAN TRUST (“Borrower”), a trust forming part of the
East Boston Savings Bank Employee Stock Ownership Plan (“ESOP”);
and [MERIDIAN INTERSTATE FUNDING CORP.] (“Lender”), a
corporation organized and existing under the laws of the Commonwealth of
Massachusetts.


W I T N E S S E T H


          WHEREAS, the
Borrower is authorized to purchase shares of common stock of Meridian Interstate
Bancorp, Inc. (“Common Stock”), either directly from Meridian
Interstate Bancorp, Inc. or in open market purchases in an amount not to exceed
[NUMBER] [AMOUNT] shares of Common Stock.


          WHEREAS, the
Borrower is authorized to borrow funds from the Lender for the purpose of
financing authorized purchases of Common Stock; and


          WHEREAS, the Lender
is willing to make a loan to the Borrower for such purpose.


          NOW, THEREFORE, the
parties agree hereto as follows:


ARTICLE I
 DEFINITIONS


          The following
definitions shall apply for purposes of this Loan Agreement, except to the
extent that a different meaning is plainly indicated by the context:



          “Business
Day” means any day other than a Saturday, Sunday or other day on
which banks are authorized or required to close under federal or local law or
regulation.



          “Code”
means the Internal Revenue Code of 1986, as amended (including the corresponding
provisions of any succeeding law).



          “Default”
means an event or condition which would constitute an Event of Default. 
The determination as to whether an event or condition would constitute an Event
of Default shall be determined without regard to any applicable requirements of
notice or lapse of time.



          “ERISA”
means the Employee Retirement Income Security Act of 1974, as amended (including
the corresponding provisions of any succeeding law).


          “Event of
Default” means an event or condition described in Article
5.



          “Loan”
means the loan described in section 2.1.


          “Loan
Documents” means, collectively, the Loan Agreement, the Promissory
Note and the Pledge Agreement and all other documents now or hereafter executed
and delivered in connection with such documents, including all amendments,
modifications and supplements of or to all such documents.


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          “Pledge
Agreement” means the agreement described in section
2.8(a).



          “Principal Amount”
means the face amount of the Promissory Note, determined as set forth in section
2.1(c).



          “Promissory
Note” means the promissory note described in section
2.3.



          “Register”
means the register described in section 2.9.


ARTICLE II
 THE LOAN; PRINCIPAL AMOUNT;
 INTEREST; SECURITY; INDEMNIFICATION


          Section
2.1          The Loan;
Principal Amount.



          (a)          The
Lender hereby agrees to lend to the Borrower such amount, and at such time, as
shall be determined under this Section 2.1; provided, however, that in no event
shall the aggregate amount lent under this Loan Agreement from time to time
exceed the greater of (i) $[AMOUNT] or (ii) the aggregate amount
paid by the Borrower to purchase up to [NUMBER] shares of Common
Stock.



          (b)          Subject
to the limitations of Section 2.1(a), the Borrower shall determine the amounts
borrowed under this Agreement, and the time at which such borrowings are
effected.  Each such determination shall be evidenced in a writing which
shall set forth the amount to be borrowed and the date on which the Lender shall
disburse such amount, and such writing shall be furnished to the Lender by
notice from the Borrower.  The Lender shall disburse to the Borrower the
amount specified in each such notice on the date specified therein or, if later,
as promptly as practicable following the Lender’s receipt of such notice;
provided, however, that the Lender shall have no obligation to disburse funds
pursuant to this Agreement following the occurrence of a Default or an Event of
Default until such time as such Default or Event of Default shall have been
cured.



          (c)          For
all purposes of this Loan Agreement, the Principal Amount on any date shall be
equal to the excess, if any, of:


	
  
 
  	
  
(i)
  	
  
the aggregate amount disbursed by the Lender pursuant to section 2.1(b) on or
before such date; over
 
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(ii)
  	
  
the aggregate amount of any repayments of such amounts made before such
date.
 




The Lender shall maintain on the Register a record of, and shall record in the
Promissory Note, the Principal Amount, any changes in the Principal Amount and
the effective date of any changes in the Principal Amount.


          Section
2.2          Interest.



          (a)          The
Borrower shall pay to the Lender interest on the Principal Amount, for the
period commencing with the first disbursement of funds under this Loan Agreement
and continuing until the Principal Amount shall be paid in full, at the rate of
[NUMBER] ([NUMBER]%) per annum.  Interest payable under this
Agreement shall be computed on the basis of a year of 365 days and actual days



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elapsed (including the first day but excluding the last) occurring during the
period to which the computation relates.





          (b)          Accrued
interest on the Principal Amount shall be payable by the Borrower on the dates
set forth in Schedule I to the Promissory Note.  All interest on the
Principal Amount shall be paid by the Borrower in immediately available
funds.



          (c)          Anything
in the Loan Agreement or the Promissory Note to the contrary notwithstanding,
the obligation of the Borrower to make payments of interest shall be subject to
the limitation that payments of interest shall not be required to be made to the
Lender to the extent that the Lender’s receipt thereof would not be
permissible under the law or laws applicable to the Lender limiting rates of
interest which may be charged or collected by the Lender.  Any such payment
referred to in the preceding sentence shall be made by the Borrower to the
Lender on the earliest interest payment date or dates on which the receipt
thereof would be permissible under the laws applicable to the Lender limiting
rates of interest which may be charged or collected by the Lender.  Such
deferred interest shall not bear interest.


          Section
2.3          Promissory
Note.


          The Loan shall be
evidenced by the Promissory Note of the Borrower attached hereto as an exhibit
payable to the order of the lender in the Principal Amount and otherwise duly
completed.


          Section
2.4          Payment of
Trust Loan.


          The Principal Amount
of the Loan shall be repaid in accordance with Schedule I to the Promissory Note
on the dates specified therein until fully paid.


          Section
2.5          Prepayment.


          The Borrower shall
be entitled to prepay the Loan in whole or in part, at any time and from time to
time; provided, however, that the Borrower shall give notice to the Lender of
any such prepayment; and provided, further, that any partial prepayment of the
Loan shall be in an amount not less than $1,000. Any such prepayment shall be:
(a) permanent and irrevocable; (b) accompanied by all accrued interest
through the date of such prepayment; (c) made without premium or penalty; and
(d) applied on the inverse order of the maturity of the installment thereof
unless the Lender and the Borrower agree to apply such prepayments in some other
order.


          Section
2.6          Method of
Payments.



          (a)          All
payments of principal, interest, other charges (including indemnities) and other
amounts payable by the Borrower hereunder shall be made in lawful money of the
United States, in immediately available funds, to the Lender at the address
specified in or pursuant to this Loan Agreement for notices to the Lender, on
the date on which such payment shall become due.  Any such payment made on
such date but after such time shall, if the amount paid bears interest, and
except as expressly provided to the contrary herein, be deemed to have been made
on, and interest shall continue to accrue and be payable thereon until, the next
succeeding Business Day.  If any payment of principal or interest becomes
due on a day other than a Business Day, such payment may be made on the next
succeeding Business Day, and when paid, such payment shall include interest to
the day on which payment is in fact made.



          (b)          Notwithstanding
anything to the contrary contained in this Loan Agreement or the Promissory
Note, the Borrower shall not be obligated to make any payment, repayment or
pre-payment on the Promissory Note if doing so would cause the ESOP to cease to
be an employee stock ownership


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plan within the meaning of section 4975(e)(7) of the Code or qualified under
section 401(a) of the Code or cause the Borrower to cease to be a tax exempt
trust under section 501(a) of the Code or if such act or failure to act would
cause the Borrower to engage in any “prohibited transaction” as such
term is defined in the section 4975(c) of the Code and the regulations
promulgated thereunder which is not exempted by section 4975(c)(2) or (d) of the
Code and the regulations promulgated thereunder or in section 406 of ERISA and
the regulations promulgated thereunder which is not exempted by section 408(b)
of ERISA and the regulations promulgated thereunder; provided, however, that in
each case, the Borrower, may act or refrain from acting pursuant to this section
2.6(b) on the basis of an opinion of counsel.  The Borrower may consult
with counsel, and any opinion of such counsel shall be full and complete
authorization and protection in respect of any action taken or suffered or
omitted by it hereunder in good faith and in accordance with such opinion of
counsel.  Nothing contained in this section 2.6(b) shall be construed as
imposing a duty on the Borrower to consult with counsel.  Any obligation of
the Borrower to make any payment, repayment or prepayment on the Promissory Note
or refrain from taking any other act hereunder or under the Promissory Note
which is excused pursuant to this section 2.6(b) shall be considered a binding
obligation of the Borrower, or both, as the case may be, for the purposes of
determining whether a Default or Event of Default has occurred hereunder or
under the Promissory Note and nothing in this section 2.6(b) shall be construed
as providing a defense to any remedies otherwise available upon a Default or an
Event of Default hereunder (other than the remedy of specific
performance).


          Section
2.7          Use of
Proceeds of Loan.


          The entire proceeds
of the Loan shall be used solely for acquiring shares of Common Stock, and for
no other purpose whatsoever.


          Section
2.8          Security.



          (a)          In
order to secure the due payment and performance by the Borrower of all of its
obligations under this Loan Agreement, simultaneously with the execution and
delivery of this Loan Agreement by the Borrower, the Borrower shall:

	
  
 
  	
  
(i)
  	
  
pledge to the Lender as Collateral (as defined in the Pledge Agreement), and
grant to the Lender a first priority lien on and security interest in, the
Common Stock purchased with the Principal Amount, by the execution and delivery
to the lender of the Pledge Agreement attached hereto as an exhibit;
and
 
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
(ii)
  	
  
execute and deliver, or cause to be executed and delivered, such other
agreement, instruments and documents as the Lender may reasonably require in
order to effect the purposes of the Pledge Agreement and this Loan
Agreement.
 




          (b)          The
Lender shall release from encumbrance under the Pledge Agreement and transfer to
the Borrower, as of the date on which any payment or repayment of the Principal
Amount is made, a number of shares of Common Stock held as Collateral determined
pursuant to the applicable provisions of the ESOP.


Section
2.9          Registration
of the Promissory Note.



          (a)          The
Lender shall maintain a Register providing for the registration of the Principal
Amount and any stated interest and of transfer and exchange of the Promissory
Note.  Transfer of the Promissory Note may be effected only by the
surrender of the old instrument and either the reissuance by


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the Borrower of the old instrument to the new holder or the issuance by the Borrower of a new
instrument to the new holder.  The old Promissory Note so surrendered shall
be canceled by the Lender and returned to the Borrower after such
cancellation.





          (b)          Any
new Promissory Note issued pursuant to section 2.9(a) shall carry the same
rights to interest (unpaid and to accrue) carried by the Promissory Note so
transferred or exchanged so that there will not be any loss or gain of interest
on the note surrender.  Such new Promissory Note shall be subject to all of
the provisions and entitled to all of the benefits of this Agreement. 
Prior to due presentment for registration or transfer, the Borrower may deem and
treat the registered holder of any Promissory Note as the holder thereof for
purposes of payment and other purposes.  A notation shall be made on each
new Promissory Note of the amount of all payments of principal and interest
theretofore paid.


ARTICLE III
 REPRESENTATIONS AND WARRANTIES OF THE BORROWER


          The Borrower hereby
represents and warrants to the Lender as follows:


          Section
3.1          Power,
Authority, Consents.


          The Borrower has the
power to execute, deliver and perform this Loan Agreement, the Promissory Note
and Pledge Agreement, all of which have been duly authorized by all necessary
and proper corporate or other action.


          Section
3.2          Due Execution,
Validity, Enforceability.


          Each of the Loan
Documents, including, without limitation, this Loan Agreement, the Promissory
Note and the Pledge Agreement, has been duly executed and delivered by the
Borrower; and each constitutes the valid and legally binding obligation of the
Borrower, enforceable in accordance with its terms.


          Section
3.3          Properties,
Priority of Liens.


          The liens which have
been created and granted by the Pledge Agreement constitute valid, first liens
on the properties and assets covered by the Pledge Agreement, subject to no
prior or equal lien.


          Section
3.4          No Defaults,
Compliance with Laws.


          The Borrower is not
in default in any material respect under any agreement, ordinance, resolution,
decree, bond, note, indenture, order or judgment to which it is a party or by
which it is bound, or any other agreement or other instrument by which any of
the properties or assets owned by it is materially affected.


          Section
3.5          Purchase of
Common Stock.


          Upon consummation of
any purchase of Common Stock by the Borrower with the proceeds of the Loan, the
Borrower shall acquire valid, legal and marketable title to all of the Common
Stock so purchased, free and clear of any liens, other than a pledge to the
Lender of the Common Stock so purchased pursuant to the Pledge Agreement. 
Neither the execution and delivery of the Loan Documents nor the performance of
any obligation thereunder violates any provisions of law or conflicts with or
results in a breach of or creates (with or without the giving of notice of lapse
of time, or both) a default


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under any agreement to which the Borrower is a party or by which it is bound or
any of its properties is affected.  No consent of any federal, state, or
local governmental authority, agency, or other regulatory body, the absence of
which could have a materially adverse effect on the Borrower or the Trustee, is
or was required to be obtained in connection with the execution, delivery, or
performance of the Loan Documents and the transaction contemplated therein or in
connection therewith, including without limitation, with respect to the transfer
of the shares of Common Stock purchased with the proceeds of the Loan pursuant
thereto.


          Section
3.6          ESOP;
Contributions.


          As of the effective
date of the ESOP sponsor’s mutual holding company reorganization, the ESOP
and the Borrower will be duly created, organized and maintained by the ESOP
sponsor in compliance with all applicable laws, regulations and rulings. 
The ESOP will qualify as an “employee stock ownership plan” as defined
in section 4975(e)(7) of the Code.  The ESOP provides that the ESOP sponsor
may make contributions to the ESOP in an amount necessary to enable the Trustee
to amortize the Loan in accordance with the terms of the Promissory Note;
provided, however, that no such contributions shall be required if they would
adversely affect the qualification of the ESOP under section 401(a) of the
Code.


          Section
3.7          Trustee.


          The trustee of the
ESOP has been duly appointed by the ESOP sponsor.  


          Section
3.8          Compliance
with Laws; Actions.


          Neither the
execution and delivery by the Borrower of this Loan Agreement or any instruments
required thereby, nor compliance with the terms and provisions of any such
documents by the lender, constitutes a violation of any provision of any law or
any regulation, order, writ, injunction or decree of any court or governmental
instrumentality, or an event of default under any agreement, to which the
Borrower is a party, to which the Borrower is bound or to which the Borrower is
subject, which violation or event of default would have a material adverse
effect on the Borrower.  There is no action or proceeding pending or
threatened against either the ESOP or the Borrower before any court or
administrative agency.


ARTICLE IV
 REPRESENTATIONS AND WARRANTIES OF THE LENDER


          The Lender hereby
represents and warrants to the Borrower as follows:


          Section
4.1          Power,
Authority, Consents.


          The Lender has the
power to execute, deliver and perform this Loan Agreement, the Pledge Agreement
and all documents executed by the Lender in connection with the Loan, all of
which have been duly authorized by all necessary and proper corporate or other
action.  No consent, authorization or approval or other action by any
governmental authority or regulatory body, and no notice by the Lender to, or
filing by the Lender with, any governmental authority or regulatory body is
required for the due execution, delivery and performance of this Loan
Agreement.


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          Section
4.2          Due Execution,
Validity, Enforceability.


          This Loan Agreement
and the Pledge Agreement have been duly executed and delivered by the Lender,
and each constitutes a valid and legally binding obligation of the Lender,
enforceable in accordance with its terms.


ARTICLE V
 EVENTS OF DEFAULT


          Section
5.1          Events of
Default under Loan Agreement.


          Each of the
following events shall constitute an “Event of Default”
hereunder:



          (a)          Failure
to make any payment or mandatory prepayment of principal of the Promissory Note
when due, or failure to make any payment of interest on the Promissory Note not
later than five (5) Business Days after the date when due.







          (b)          Failure
by the Borrower to perform or observe any term, condition or covenant of this
Loan Agreement or of any of the other Loan Documents, including, without
limitation, the Promissory Note and the Pledge Agreement.



          (c)          Any
representation or warranty made in writing to the Lender in any of the Loan
Documents, or any certificate, statement or report made or delivered in
compliance with this Loan Agreement, shall have been false or misleading in any
material respect when made or delivered.


          Section
5.2          Lender’s
Rights upon Event of Default.


          If an Event of
Default under this Loan Agreement shall occur and be continuing, the Lender
shall have no rights to assets of the Borrower other than: (a) contributions
(other than contributions of Common Stock) that are made by the ESOP sponsor to
enable the Borrower to meet its obligations pursuant to this Loan Agreement and
earnings attributable to the investment of such contributions and (b)
“Eligible Collateral” (as defined in the Pledge Agreement); provided,
however, that: (i) the value of the Borrower’s assets transferred to the
Lender following an Event of Default in satisfaction of the due and unpaid
amount of the Loan shall not exceed the amount in default (without regard to
amounts owing solely as a result of any acceleration of the Loan); (ii) the
Borrower’s assets shall be transferred to the Lender following an Event of
Default only to the extent of the failure of the Borrower to meet the payment
schedule of the Loan; and (iii) all rights of the Lender to the Common Stock
purchased with the proceeds of the Loan covered by the Pledge Agreement
following an Event of Default shall be governed by the terms of the Pledge
Agreement.


ARTICLE VI
 MISCELLANEOUS PROVISIONS


          Section
6.1          Payments Due
to the Lender.


          If any amount is
payable by the Borrower to the Lender pursuant to any indemnity obligation
contained herein, then the Borrower shall pay, at the time or times provided
therefor, any such amount and shall indemnify the Lender against and hold it
harmless from any loss or damage resulting from or arising out of the nonpayment
or delay in payment of any such amount.  If any amounts as to which
the


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Borrower has so indemnified the Lender hereunder shall be assessed or levied
against the Lender, the Lender may notify the Borrower and make immediate
payment thereof, together with interest or penalties in connection therewith,
and shall thereupon be entitled to and shall receive immediate reimbursement
therefor from the Borrower, together with interest on each such amount as
provided for in section 2.2(c).  Notwithstanding any other provision
contained in this Loan Agreement, the covenants and agreements of the Borrower
contained in this section 6.1 shall survive: (a) payment of the Promissory Note
and (b) termination of this Loan Agreement.


          Section
6.2          Payments.


          All payments
hereunder and under the Promissory Note shall be made without set-off or
counterclaim and in such amounts as may be necessary in order that all such
payments shall not be less than the amounts otherwise specified to be paid under
this Loan Agreement and the Promissory Note, subject to any applicable tax
withholding requirements.  Upon payment in full of the Promissory Note, the
Lender shall mark such Promissory Note “Paid” and return it to the
Borrower.


          Section
6.3          Survival.


          All agreements,
representations and warranties made herein shall survive the delivery of this
Loan Agreement and the Promissory Note.


          Section
6.4          Modifications,
Consents and Waivers; Entire Agreement.


          No modification,
amendment or waiver of or with respect to any provision of this Loan Agreement,
the Promissory Note, the Pledge Agreement, or any of the other Loan Documents,
nor consent to any departure from any of the terms or conditions thereof, shall
in any event be effective unless it shall be in writing and signed by the party
against whom enforcement thereof is sought.  Any such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given.  No consent to or demand on a party in any case shall, of itself,
entitle it to any other or further notice or demand in similar or other
circumstances.  This Loan Agreement embodies the entire agreement and
understanding between the Lender and the Borrower and supersedes all prior
agreements and understandings relating to the subject matter hereof.


          Section
6.5          Remedies
Cumulative.


          Each and every right
granted to the Lender hereunder or under any other document delivered hereunder
or in connection herewith, or allowed it by law or equity, shall be cumulative
and may be exercised from time to time.  No failure on the part of the
Lender or the holder of the Promissory Note to exercise, and no delay in
exercising, any right shall operate as a waiver thereof, nor shall any single or
partial exercise of any right preclude any other or future exercise thereof or
the exercise of any other right.  The due payment and performance of the
obligations under the Loan Documents shall be without regard to any
counterclaim, right of offset or any other claim whatsoever which the Borrower
may have against the Lender and without regard to any other obligation of any
nature whatsoever which the Lender may have to the Borrower, and no such
counterclaim or offset shall be asserted by the Borrower in any action, suit or
proceeding instituted by the Lender for payment or performance of such
obligations.


          Section
6.6          Further
Assurances; Compliance with Covenants.


          At any time and from
time to time, upon the request of the Lender, the Borrower shall execute,
deliver and acknowledge or cause to be executed, delivered and acknowledged,
such further documents and instruments and do such other acts and things as the
Lender may reasonably request in order to fully


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effect the terms of this Loan
Agreement, the Promissory Note, the Pledge Agreement, the other Loan Documents
and any other agreements, instruments and documents delivered pursuant hereto or
in connection with the Loan.




          Section
6.7          Notices.


          Except as otherwise
specifically provided for herein, all notices, requests, reports and other
communications pursuant to this Loan Agreement shall be in writing, either by
letter (delivered by hand or commercial messenger service or sent by registered
or certified mail, return receipt requested, except for routine reports
delivered in compliance with Article VI hereof which may be sent by ordinary
first-class mail) or telex or telecopier addressed as follows:



          (a)                    If
to the Borrower:

                                  [NAME]

                                  [ADDRESS]



          (b)                    If
to the Lender:

                                  [NAME]

                                  [ADDRESS]


Any notice, request or communication hereunder shall be deemed to have been
given on the day on which it is delivered by hand or by commercial messenger
service, or sent by telex or telecopier, to such party at its address specified
above, or, if sent by mail, on the third Business Day after the day deposited in
the mail, postage prepaid, addressed as aforesaid.  Any party may change
the person or address to whom or which notices are to be given hereunder, by
notice duly given hereunder; provided, however, that any such notice shall be
deemed to have been given only when actually received by the party to whom it is
addressed.


          Section
6.8          Counterparts.


          This Loan Agreement
may be signed in any number of counterparts which, when taken together, shall
constitute one and the same document.


          Section
6.9          Construction;
Governing Law.


          The headings used in
the table of contents and in this Loan Agreement are for convenience only and
shall not be deemed to constitute a part hereof.  All uses herein of any
gender or of singular or plural terms shall be deemed to include uses of the
other genders or plural or singular terms, as the context may require.  All
references in this Loan Agreement of an Article or section shall be to an
Article or section of this Loan Agreement, unless otherwise specified. 
This Loan Agreement, the Promissory Note, the Pledge Agreement and the other
Loan Documents shall be governed by, and construed and interpreted in accordance
with, the laws of the Commonwealth of Massachusetts.


          Section
6.10          Severability.


          Wherever possible,
each provision of this Loan Agreement shall be interpreted in such manner as to
be effective and valid under applicable law; however, the provisions of this
Loan Agreement are severable, and if any clause or provision hereof shall be
held invalid or unenforceable in whole or in part in any jurisdiction, then such
invalidity or unenforceability shall affect only such clause or provision, or
part thereof, in such jurisdiction and shall not in any manner affect such
clause or provision in any other jurisdiction, or any other clause or provisions
in this Loan Agreement in any jurisdiction.  Each of the


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covenants, agreements and conditions contained in this Loan Agreement are
independent, and compliance by a party with any of them shall not excuse
non-compliance by such party with any other.  The Borrower shall not take
any action the effect of which shall constitute a breach or violation of any
provision of this Loan Agreement.


          Section
6.11          Binding
Effect: No Assignment or Delegation.


          This Loan Agreement
shall be binding upon and inure to the benefit of the Borrower and its
successors and the Lender and its successors and assigns.  The rights and
obligations of the Borrower under this Agreement shall not be assigned or
delegated without the prior written consent of the Lender, and any purported
assignment or delegation without such consent shall be void.


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          IN WITNESS WHEREOF,
the parties have caused this Loan Agreement to be executed as of the date first
written above.

	
  
 
  	
  
EAST   BOSTON SAVINGS BANK
  
	
  
 
  	
  
EMPLOYEE   STOCK OWNERSHIP PLAN TRUST
  
	
   
  	
  
 
  	
  
 
  
	
  
 
  	
  


  
	
  
 
  	
  
Authorized Trust Officer
  
	
  
 
  	
  
 
  
	
  
 
  	
  
 
  
	
  
 
  	
  
[MERIDIAN   INTERSTATE FUNDING CORP.]
  
	
  
 
  	
  
 
  
	
  
 
  	
  
 
  
	
  
 
  	
  
By:
  	
  
 
  
	
  
 
  	
  
 
  	
  


  
	
   
  	
  
 
  	
  
[NAME]
  




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FORM OF
 PLEDGE AGREEMENT


          THIS PLEDGE
AGREEMENT (“Pledge Agreement”) is made as of the [DATE], by and
between the EAST BOSTON SAVINGS BANK EMPLOYEE STOCK OWNERSHIP PLAN
TRUST (“Pledgor”), and [MERIDIAN INTERSTATE FUNDING CORP.]
(“Pledgee”).


W I T N E S S E T H


          WHEREAS, this Pledge
Agreement is being executed and delivered to the Pledgee pursuant to the terms
of a Loan Agreement (“Loan Agreement”), by and between the Pledgor and
the Pledgee;


          NOW, THEREFORE, in
consideration of the mutual agreements contained herein and in the Loan
Agreement, the parties hereto do hereby covenant and agree as
follows:


          Section
1.  Definitions.  The following definitions shall apply for
purposes of this Pledge Agreement, except to the extent that a different meaning
is plainly indicated by the context; all capitalized terms used but not defined
herein shall have the respective meanings assigned to them in the Loan
Agreement:



          “Collateral”
shall mean the Pledged Shares and, subject to section 5 hereof, and to the
extent permitted by applicable law, all rights with respect thereto, and all
proceeds of such Pledged Shares and rights.



          “ESOP”
shall mean the East Boston Savings Bank Employee Stock Ownership
Plan.


          “Event of
Default” shall mean an event so defined in the Loan
Agreement.



          “Liabilities”
shall mean all the obligations of the Pledgor to the Pledgee, howsoever created,
arising or evidenced, whether direct or indirect, absolute or contingent, now or
hereafter existing, or due or to become due, under the Loan Agreement and the
Promissory Note.


          “Pledged
Shares” shall mean all the Shares of Common Stock of the Pledgee
purchased by the Pledgor with the proceeds of the loan made by the Pledgee to
the Pledgor pursuant to the Loan Agreement, but excluding any such shares
previously released pursuant to section 4.


          Section
2.  Pledge.  To secure the payment of and performance of
all the Liabilities, the Pledgor hereby pledges to the Pledgee, and grants to
the Pledgee, a security interest in, and lien upon, the Collateral.


          Section
3.  Representations and Warranties of the Pledgor.  The
Pledgor represents, warrants, and covenants to the Pledgee as
follows:



          (a)          the
execution, delivery and performance of this Pledge Agreement and the pledging of
the Collateral hereunder do not and will not conflict with, result in a
violation of, or constitute a default under, any agreement binding upon the
Pledgor;



          (b)          the
Pledged Shares are and will continue to be owned by the Pledgor free and clear
of any liens or rights of any other person except the lien hereunder and under
the Loan Agreement in favor of the Pledgee, and the security interest of the
Pledgee in the Pledged Shares and the proceeds thereof is and will continue to
be prior to and senior to the rights of all others;


  











          (c)          this
Pledge Agreement is the legal, valid, binding and enforceable obligation of the
Pledgor in accordance with its terms;



          (d)          the
Pledgor shall, from time to time, upon request of the Pledgee, promptly deliver
to the Pledgee such stock powers, proxies, and similar documents, satisfactory
in form and substance to the Pledgee, with respect to the Collateral as the
Pledgee may reasonably request; and



          (e)          subject
to the first sentence of section 4(b), the Pledgor shall not, so long as any
Liabilities are outstanding, sell, assign, exchange, pledge or otherwise
transfer or encumber any of its rights in and to any of the
Collateral.


          Section
4.  Eligible Collateral.



          (a)          As
used herein the term “Eligible Collateral” shall mean the amount of
Collateral which has an aggregate fair market value equal to the amount by which
the Pledgor is in default (without regard to any amounts owing solely as the
result of an acceleration of the Loan Agreement) or such lesser amount of
Collateral as may be required pursuant to section 13 of this Pledge
Agreement.



          (b)          The
Pledged Shares shall be released from this Pledge Agreement in a manner
conforming to the requirements of Treasury Regulations Section 54.4975-7(b)(8),
as the same may be from time to time amended or supplemented, and the applicable
provisions of the ESOP.  Subject to such Regulations, the Pledgee may from
time to time, after any Default or Event of Default, and without prior notice to
the Pledgor, transfer all or any part of the Eligible Collateral in the name of
the Pledgee or its nominee, without disclosing that such Eligible Collateral is
subject to any rights of the Pledgor and may from time to time, whether before
or after any of the Liabilities shall become due and payable, without notice to
the Pledgor, take all or any of the following actions: (i) notify the parties
obligated on any of the Eligible Collateral to make payment to the Pledgee of
any amounts due or due to become due thereunder, (ii) release or exchange all or
any part of the Eligible Collateral, or compromise or extend or renew for any
period (whether or not longer than the original period) any obligations of any
nature of any party with respect thereto, and (iii) take control of any proceeds
of the Eligible Collateral.


          Section
5.  Delivery.



          (a)          The
Pledgor shall deliver to the Pledgee upon execution of this Pledge Agreement (i)
either (A) certificates for the Pledged Shares, each certificate duly signed in
blank by the Pledgor or accompanied by a stock transfer power duly signed in
blank by the Pledgor and each such certificate accompanied by all required
documentary or stock transfer tax stamps or (B) if the Trustee does not yet have
possession of the Pledged Shares, an assignment by the Pledgor of all the
Pledgor’s rights to and interest in the Pledged Shares and (ii) an
irrevocable proxy, in form and substance satisfactory to the Pledgee, signed by
the Pledgor with respect to the Pledged Shares.



          (b)          So
long as no Default or Event of Default shall have occurred and be continuing,
(i) the Pledgor shall be entitled to exercise any and all voting and other
rights pertaining to the Collateral or any part thereof for any purpose not
inconsistent with the terms of this Pledge Agreement, and (ii) the Pledgor shall
be entitled to receive any and all cash dividends or other distributions paid in
respect of the Collateral.


          Section
6.  Events of Default.



          (a)          If
a Default or Event of Default shall be existing, in addition to the rights it
may have under the Loan Agreement, the Promissory Note, and this Pledge
Agreement, or by virtue of any other


2










instrument, (i) the Pledgee may exercise, with respect to the Eligible
Collateral, from time to time, any rights and remedies available to it under the
Uniform Commercial Code as in effect from time to time in the State of Indiana
or otherwise available to it and (ii) the Pledgee shall have the right, for and
in the name, place and stead of the Pledgor, to execute endorsement,
assignments, stock powers and other instruments of conveyance or transfer with
respect to all or any of the Eligible Collateral.  Written notification of
intended disposition of any of the Eligible Collateral shall be given by the
Pledgee to the Pledgor at least three (3) Business Days before such
disposition.  Subject to section 13 below, any proceeds of any disposition
of Eligible Collateral may be applied by the Pledgee to the payment of expenses
in connection with the Eligible Collateral, including, without limitation,
reasonable attorneys’ fees and legal expenses, and any balance of such
proceeds may be applied by the Pledgee toward the payment of such of the
Liabilities as are in Default, and in such order of application, as the Pledgee
may from time to time elect.  No action of the Pledgee permitted hereunder
shall impair or affect its rights in and to the Eligible Collateral.  All
rights and remedies of the Pledgee expressed hereunder are in addition to all
other rights and remedies possessed by it, including, without limitation, those
contained in the documents referred to in the definition of Liabilities in
section 1 hereof.



          (b)          In
any sale of any of the Eligible Collateral after a Default or an Event of
Default shall have occurred, the Pledgee is hereby authorized to comply with any
limitation or restriction in connection with such sale as it may be advised by
counsel is necessary in order to avoid violation of applicable law (including,
without limitation, compliance with such procedures as may restrict the number
of prospective bidders and purchasers or further restrict such prospective
bidders or purchasers to persons who will represent and agree that they are
purchasing for their own account for investment and not with a view to the distribution or resale of such
Eligible Collateral), or in order to obtain such required approval of the sale
or of the purchase by any governmental regulatory authority or official, and the
Pledgor further agrees that such compliance shall not result in such sale being
considered or deemed not to have been made in a commercially reasonable manner,
nor shall the Pledgee be liable or accountable to the Pledgor for any discount
allowed by reason of the fact that such Eligible Collateral is sold in
compliance with any such limitation or restriction.


          Section
7.  Payment in Full.  Upon the payment in full of all
outstanding Liabilities, this Pledge Agreement shall terminate and the Pledgee
shall forthwith assign, transfer and deliver to the Pledgor, against receipt and
without recourse to the Pledgee, all Collateral then held by the Pledgee
pursuant to the Pledge Agreement.


          Section
8.  No Waiver.  No failure or delay in the part of the
Pledgee in exercising any right or remedy hereunder or under any other document
which confers or grants any rights to the Pledgee in respect of the Liabilities
shall operate as a waiver thereof nor shall any single or partial exercise of
any such rights or remedy preclude any other or further exercise thereof or the
exercise of any other right or remedy of the Pledgee.


          Section
9.  Binding Effect; No Assignment or Delegation.  This
Pledge Agreement shall be binding upon and inure to the benefit of the Pledgor,
the Pledgee and their respective successors and assigns, except that the Pledgor
may not assign or transfer its rights hereunder without the prior written
consent of the Pledgee (which consent shall not unreasonably be withheld). 
Each duty or obligation of the Pledgor to the Pledgee pursuant to the provisions
of this Pledge Agreement shall be performed in favor of any person or entity
designated by the Pledgee, and any duty or obligation of the Pledgee to the
Pledgor may be performed by any other person or entity designated by the
Pledgee.


          Section
10.  Governing Law.  This Pledge Agreement shall be
governed by and construed in accordance with the laws of the Commonwealth of
Massachusetts applicable to agreements to be performed wholly within the
Commonwealth of Massachusetts.


3










          Section
11.  Notices.  All notices, requests, instructions or
documents hereunder shall be in writing and delivered personally or sent by
United States mail, registered or certified, return receipt requested, with
proper postage prepaid as follows:




                    (a)          If
to the Pledgee:

                                  [NAME]

                                  [ADDRESS]




                    (b)          If
to the Pledgor:

                                  [NAME]

                                  [ADDRESS]


or at such other address as either of the parties may designate by written
notice to the other party.  If delivered personally, the date on which a
notice, request, instruction or document is delivered shall be the date on which
such delivery is made, and, if delivered by mail, the date on which such notice,
request, instruction, or document is deposited in the mail shall be the date of
delivery.  Each notice, request, instruction or document shall bear the
date on which it is delivered.


          Section
12.  Interpretation.  Wherever possible each provision of
this Pledge Agreement shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision herein shall be prohibited by
or invalid under such law, such provision shall be ineffective to the extent of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions hereof.


          Section
13.  Construction.  All provisions hereof shall be
construed so as to maintain (a) the ESOP as a qualified leveraged employee
stock ownership plan under sections 401(a) and 4975(e)(7) of the Internal
Revenue Code of 1986 (the “Code”), (b) the Trust as exempt from
taxation under section 501(a) of the Code and (c) the Trust Loan as an exempt
loan under section 54.4975-7(b) of the Treasury Regulations and as described in
Department of Labor Regulation section 2550.408b-3.


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          IN WITNESS WHEREOF,
this Pledge Agreement has been duly executed by the parties hereto as of the day
and year first above written.

	
  
 
  	
  
EAST   BOSTON SAVINGS BANK
  
	
  
 
  	
  
EMPLOYEE   STOCK OWNERSHIP PLAN TRUST
  
	
  
 
  	
  
 
  
	
  
 
  	
  


  
	
  
 
  	
  
Authorized Trust Officer
  
	
  
 
  	
  
 
  
	
  
 
  	
  
 
  
	
   
  	
  
[MERIDIAN INTERSTATE FUNDING CORP.]
  
	
  
 
  	
  
 
  
	
  
 
  	
  
 
  
	
  
 
  	
  
By:
  	
  


  
	
  
 
  	
  
 
  	
  
[NAME]
  




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FORM OF
 PROMISSORY NOTE


          FOR VALUE
RECEIVED, the undersigned, the EAST BOSTON SAVINGS BANK EMPLOYEE STOCK
OWNERSHIP PLAN TRUST (the “Borrower”), hereby promises to pay to
the order of [MERIDIAN INTERSTATE FUNDING CORP.] (the “Lender”)
up to [AMOUNT] payable in accordance with the Loan Agreement made and
entered into between the Borrower and the Lender of even date herewith
(“Loan Agreement”) pursuant to which this Promissory Note is
issued.


          The Principal Amount
of this Promissory Note shall be payable in accordance with the schedule
attached hereto (“Schedule I”).


          This Promissory Note
shall bear interest at the rate per annum set forth or established under the
Loan Agreement, such interest to be payable in accordance with Schedule
I.


          Anything herein to
the contrary notwithstanding, the obligation of the Borrower to make payments of
interest shall be subject to the limitation that payments of interest shall not
be required to be made to the Lender to the extent that the Lender’s
receipt thereof would not be permissible under the law or laws applicable to the
Lender limiting rates of interest which may be charged or collected by the
Lender.  Any such payments of interest which are not made as a result of
the limitation referred to in the preceding sentence shall be made by the
Borrower to the Lender on the earliest interest payment date or dates on which
the receipt thereof would be permissible under the laws applicable to the Lender
limiting rates of interest which may be charged or collected by the
Lender.  Such deferred interest shall not bear interest.


          Payments of both
principal and interest on this Promissory Note are to be made at the principal
office of the Lender or such other place as the holder hereof shall designate to
the Borrower in writing, in lawful money of the United States of America in
immediately available funds.


          Failure to make any
payments of principal on this Promissory Note when due, or failure to make any
payment of interest on this Promissory Note not later than five (5) Business
Days after the date when due, shall constitute a default hereunder, whereupon
the principal amount of accrued interest on this Promissory Note shall
immediately become due and payable in accordance with the terms of the Loan
Agreement.


          This Promissory Note
is secured by a Pledge Agreement between the Borrower and the Lender of even
date herewith and is entitled to the benefits thereof.




	
  
 
  	
  
EAST   BOSTON SAVINGS BANK
  
	
  
 
  	
  
EMPLOYEE   STOCK OWNERSHIP PLAN TRUST
  
	
  
 
  	
  
 
  	
  
 
 
	
  
 
  	
  
 
  
	
  
 
  	
  


  
	
  
 
  	
  
Authorized Trust Officer