Document:

ex10-18.htm

    Exhibit 10.18

     

    
 

    SUPPLEMENTAL
EXECUTIVE RETIREMENT AGREEMENT

    FOR
EDWARD J. MERRITT

    

    This Supplemental Executive Retirement
Agreement (the “Agreement”) is entered into effective as of the Merger Effective
Time (as defined below) by and between East Boston Savings Bank, a corporation
organized and existing under the laws of the Commonwealth of Massachusetts (the
“Bank” or “Employer”) and Edward J. Merritt (the “Executive”).

    

    WITNESSETH

    

    WHEREAS, pursuant to an Agreement and
Plan of Merger, dated as of July 20, 2009 (the “Merger Agreement”), between the
Bank, Meridian Interstate Bancorp, Inc., a Massachusetts corporation (the
“Company”), Meridian Financial Services, Incorporated, a Massachusetts mutual
holding company and Mt. Washington Cooperative Bank, a Massachusetts cooperative
bank (“MWCB”), MWCB shall, as of the Merger Effective Time (as defined in the
Merger Agreement), merge with and into the Bank, with the Bank being the
surviving entity (the “Merger”);

    

    WHEREAS, the Executive is currently a
party to an amended and restated executive salary continuation agreement entered
into between MWCB and the Executive as of January 24, 2006 (the “MWCB SERP”) and
the Executive agrees to waive any amounts and benefits under the MWCB SERP in
consideration for entering into this Agreement;

    

    WHEREAS, in order to induce the
Executive to enter the employ of the Bank, the parties desire to enter into this
Agreement, effective as of the Merger Effective Time; and

    

    WHEREAS, to induce the Executive to
continue in the Bank’s employ to age sixty-five (65), the Bank proposes to
supplement the benefits payable to the Executive under the Bank’s 401(k) plan
and employee stock ownership plan.

    

    NOW, THEREFORE, in consideration of the
premises and the mutual promises of the parties hereto, the parties agree as
follows:

    

    PURPOSE

    

    The purpose of this Agreement is to
provide the Executive with supplemental retirement benefits in order to provide
him with a reasonable level of retirement income which will assist him in
maintaining an appropriate standard of living in retirement.  An
integral part of the Agreement is to encourage and induce the Executive to
remain as a full-time executive officer of the Bank until he attains the
retirement age of sixty-five (65) and to recognize his service to the
Bank.  The parties intend that this Agreement shall at all times be
characterized as a “top hat” plan of deferred compensation maintained for the
Executive who is a highly compensated employee, as described under Sections
201(2), 301(a)(3) and 401(a)(1) of the Employee Retirement Income Security Act
of 1974 (the “ERISA”), and the Agreement shall at all times satisfy Section 409A
of the Internal Revenue Code of 1986, as amended (the “Code”), and as enacted
under the American Jobs Creation Act of 2004.  The provisions of the
Agreement shall

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    be
construed to effectuate such intentions.  The Agreement shall be
unfunded for tax purposes and for purposes of Title I of ERISA.

    

    1.           Establishment of
Accumulation Account.  An Accumulation Account shall be
maintained on the books of the Employer for the Executive with respect to this
Agreement.  The Accumulation Account shall be utilized solely as a
device for the measurement and determination of the benefits, if any, payable to
the Executive pursuant to this Agreement.  The Executive will be
one-hundred percent (100%) vested in the Accumulation Account at all
times.  The amount of the Accumulation Account as of the Merger
Effective Time shall equal the amount accrued under the MWCB SERP for GAAP
purposes as of the Merger Effective Time (the “GAAP Accrual”).

    

    2.           Annual Credits to
Accumulation Account.  Commencing as of the Merger Effective
Time and ending on the date of termination of the Executive’s employment, the
Board of Directors of the Bank shall credit the Executive’s Accumulation Account
with an amount equal to $50,000 (which is the amount equal to the product of (i)
1/15, times (ii) $750,000) for each full calendar year of Executive’s
employment, and for each partial calendar year of Executive’s employment, a pro
rated amount determined by dividing the number of days during such year prior to
termination of Executive’s employment by 365, and multiplying such quotient by
$50,000. The
Accumulation Account shall be credited as of each December 31st, and
in the event the Executive terminates employment prior to December 31st, his
pro rated amount for the year of termination of service will be credited to his
Accumulation Account within thirty days after termination of his
employment.  The Executive may not make any contributions under this
Agreement.

    

    
      	
               
      

            	
              3.

            	
              Maximum Amount
      Credited to Accumulation Account.  All amounts credited
      to the Accumulation Account shall not exceed the GAAP Accrual plus
      $750,000.  No further additions to the Accumulation Account will
      be made when, and if, a total of $750,000 has been credited to the
      Accumulation Account after the Merger Effective Time, excluding the GAAP
      Accrual.

            

    

    

    
      	
               
      

            	
              4.

            	
              Payment upon
      Separation from Service.

            

    

    

    (a)  Upon
a Separation from Service prior to the attainment of age sixty (60), the
Accumulation Account shall be paid to the Executive in one hundred and twenty
(120) equal monthly installments with interest equal to the one-year Treasury
bill as of the date of the Separation of Service, with the first payment
commencing on the first day of the month following the lapse of six months after
such Separation from Service.  In the event of the Executive’s death
after such Separation from Service but prior to the completion of the one
hundred and twenty (120) installment payments described above, an amount equal
to the aggregate remaining unpaid installments shall be paid to the Executive’s
beneficiary (or estate, if there is no beneficiary) in a single lump sum payment
on the first day of the month following the occurrence of his
death.

    

    (b)  Upon
a Separation from Service on or after the attainment of age sixty (60), the
Accumulation Account shall be paid in the form of a single-life annuity (subject
to Section 18),

    
      
         

      

      
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    with such
payments to be made in equal monthly installments (1/12th of
the annual annuity benefit) until the death of the Executive, with the first
payment commencing on the first day of the month following the lapse of six
months after such Separation from Service.  The value of such
single-life annuity shall be the actuarial equivalent of the Accumulation
Account calculated in a manner that is no less favorable to the Executive (or
his beneficiary) than would be determined using the interest rates, mortality
tables and other assumptions expressed in Section 417(e) of the
Code.

    

    (c)  For
purposes hereof, Separation from Service shall mean a termination of the
Executive’s services (whether as an employee or as an independent contractor) to
the Company and the Bank for any reason other than Disability or
death.  Whether a Separation from Service has occurred shall be
determined in
accordance with the requirements of Section 409A of the Code based on
whether the facts and circumstances indicate that the Company, the Bank and the
Executive reasonably anticipated that no further services would be performed
after a certain date or that the level of bona fide services the Executive would
perform after such date (whether as an employee or as an independent contractor)
would permanently decrease to no more than twenty percent (20%) of the average
level of bona fide services performed (whether as an employee or an independent
contractor) over the immediately preceding thirty-six (36) month
period.

    

    
      	
               
      

            	
              5.

            	
              Payment upon
      Disability; Death.

            

    

    

    (a)  Upon
the Disability of the Executive, which causes a Separation from Service, the
Accumulation Account shall be paid in the form of a single-life annuity
(calculated pursuant to Section 4(b) above, and subject to Section 18), with
such payments to be made in equal monthly installments (1/12th of
the annual annuity benefit) until the death of the Executive, with the first
payment commencing on the first day of the month following the
Disability.

    

    (b)  Upon
the death of the Executive (i) while actively employed by the Bank, or (ii)
after a Separation from Service to which Section 4(b) applies, but prior to the
Insured’s receipt of the first installment payment under such Section 4(b), the
Accumulation Account shall be paid to the Executive’s beneficiary in a single
lump sum payment on the first day of the month following the occurrence of
death.

    

    (c)  For
purposes hereof, Disability shall mean an Executive (i) is unable to engage in
any substantial gainful activity by reason of any medically determinable
physical or mental impairment which can be expected to result in death or can be
expected to last for a continuous period of not less than twelve months; or (ii)
is, by reason of any medically determinable physical or mental impairment which
can be expected to result in death or can be expected to last for a continuous
period of not less than twelve months, receiving income replacement benefits for
a period of not less than three months under an accident and health plan
covering employees of the Bank (or would have received such benefits if the
Executive was eligible to participate in such plan).  If any question
shall arise as to whether during any period the Executive is Disabled, 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

    
      
         

      

      
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    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.

    

    
      	
               
      

            	
              6.

            	
              Payment upon
      Termination of the Executive Without Cause or by the Executive for Good
      Reason in connection with a Change in
  Control.

            

    

    

    (a)  Notwithstanding
anything in the Agreement to the contrary, in the event the Executive’s
employment shall be terminated by the Bank (which termination shall constitute a
Separation from Service), or its successor, without Cause, as provided in
Section 6(b), or by the Executive for Good Reason, as provided in Section 6(c),
concurrently with or within one (1) year of a Change in Control, as defined in
Section 6(d), and ending one year after consummation of such Change in Control,
the Executive’s Accumulation Account shall equal the GAAP Accrual plus $750,000
and shall be paid in a single lump sum payment to the Executive on the first day
of the month following the lapse of six months after such Separation from
Service.

    

    (b)  Termination
by the Bank without Cause.  The Executive’s employment may be
terminated by the Bank, or its successor, 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.

    

    (c)  Termination
by the Executive for Good Reason. The Executive’s employment 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, or its successor, 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 or
authorities as set forth in the employment agreement between the Executive and
the Bank, including a change in the Executive’s line of reporting so that he no
longer reports directly to the Bank’s Chief Executive Officer;

    

    (ii)           the
assignment to Executive of any duties materially inconsistent with Executive’s
position, including any material change in status or duties, excluding for this
purpose an isolated, insubstantial and inadvertent action not taken in bad faith
and that is remedied by the Bank reasonably promptly after receipt of notice
thereof given by the Executive;

    

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

    
      
         

      

      
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    (iv)           involuntary
relocation of the Bank’s offices in which the Executive is principally employed
by more than 10 miles; or

    

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

    

    (d)  For
purposes hereof, “Change in Control” shall mean a change in the ownership of
Meridian Interstate Bancorp, Inc. or the Bank, a change in the effective control
of the Company or the Bank or a change in the ownership of a substantial portion
of the assets of the Company or the Bank, in each case as provided under Section
409A of the Code and the regulations thereunder.

    

    (e)    Notwithstanding
anything in this Agreement to the contrary, in no event shall the Merger, or the
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, provided that there is no reduction in the
Executive’s compensation and benefits.

    

    7.           Designation of
Beneficiary.  The Executive may from time to time, by providing
a written notification to the Employer, designate any person or persons (who may
be designated concurrently, contingently or successively), his estate or any
trust or trusts created by him to receive benefits which are payable under this
Agreement.  Each beneficiary designation shall revoke all prior
designations and will be effective only when filed in writing with the
Employer’s Compensation Committee, or any successor thereto (the
“Committee”).  If the Executive fails to designate a beneficiary or if
a beneficiary dies before the date of the Executive’s death and no contingent
beneficiary has been designated, then the benefits which are payable as
aforesaid shall be paid to his estate.  If benefits to be paid to a
beneficiary commence and such beneficiary dies before all benefits to which such
beneficiary is entitled have been paid, the remaining benefits shall be paid to
the successive beneficiary or beneficiaries designated by the Executive, if any,
and if none to the estate of such beneficiary.

    

    8.           Claims
Procedure.  The Executive or his designated beneficiary or
beneficiaries may make a claim for benefits under this Agreement by filing a
written request with the Committee.  If a claim is wholly or partially
denied, the Committee shall furnish the claimant with written notice setting
forth in a manner calculated to be understood by the claimant;

    

    (a)           the
specific reason or reasons for the denial;

    

    (b)           specific
reference to the pertinent provisions of this Agreement on which the denial is
based;

    

    (c)           a
description of any additional material or information necessary for the claimant
to perfect his claim and an explanation why such material or information is
necessary; and

    

    (d)           appropriate
information as to the steps to be taken if the claimant wishes to submit his
claim for review.

    
      
         

      

      
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    Such notice shall be furnished to the
claimant within ninety (90) days after the receipt of his claim, unless special
circumstances require an extension of time for processing his
claim.  If an extension of time for processing is required, the
Committee shall, prior to the termination of the initial ninety (90) day period,
furnish the claimant with written notice indicating the special circumstances
requiring an extension and the date by which the Committee expects to render its
decision.  In no event shall an extension exceed a period of ninety
(90) days from the end of the initial ninety (90) day period.

    

    A claimant may request the Committee to
review a denied claim.  Such request shall be in writing and must be
delivered to the Committee within sixty (60) days after receipt by the claimant
of written notification of denial of claim.  A claimant or his duly
authorized representative may:

    

    (a)           review
pertinent documents, and

    

    (b)           submit
issues and comments in writing.

    

    The Committee shall notify the claimant
of its decision on review not later than sixty (60) days after receipt of a
request for review, unless special circumstances require an extension of time
for processing, in which case a decision shall be rendered as soon as possible,
but not later than one hundred twenty (120) days after receipt of a request for
review.  If an extension of time for review is required because of
special circumstances, written notice of the extension must be furnished to the
claimant prior to the commencement of the extension.  The Committee’s
decision on the review shall be in writing and shall include specific reasons
for the decision, as well as specific references to the pertinent provisions of
this Agreement on which the decision is based.

    

    9.           Statement of Accumulation
Account.  Within 90 days after the close of each calendar year,
the Committee shall submit to the Executive a statement in such form as the
Committee deems desirable setting forth the balance as of the last day of the
calendar year in the Accumulation Account maintained for the
Executive.

    

    10.           Withholding.  To
the extent required by the law in effect at the time payment of the Accumulation
Account is made, the Bank shall withhold from such payment any taxes or other
amounts required by law to be withheld.

    

    11.           Unsecured
Promise.  Nothing contained in this Agreement shall create or
require the Employer to create a trust of any kind to fund the benefits payable
hereunder.  To the extent that the Executive or any other person
acquires a right to receive payments from the Employer, such individual shall at
all times remain an unsecured general creditor of the Employer.

    

    12.           Assignment.  The
right of the Executive or any other person to the payment of benefits under this
Agreement shall not be subject to alienation, assignment, garnishment,
attachment, execution or levy of any kind, and any attempt to cause such
benefits to be so subjected shall not be recognized by the
Employer.

    
      
         

      

      
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    13.           Employment.  Nothing
contained herein shall be construed to grant the Executive the right to be
retained in the employ of the Employer or any other rights or interests other
than those specifically set forth.

    

    14.           Amendment, Suspension or
Termination.  This Agreement shall be binding upon and inure to
the benefit of the Employer and the Executive.  The Employer shall
have the right to suspend, terminate or amend this Agreement only with the
mutual consent of the Executive; provided, however, no such suspension,
termination or amendment shall adversely affect the rights of the Executive or
any beneficiary to the funds and benefits which have accrued as of the date of
such action.

    

    15.           Successors.  This
Agreement shall be binding upon and inure to the benefit of the Employer, its
successors and assigns and the Executive and his heirs, executors,
administrators, and legal representatives.

    

    16.           Governing
Law.  This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts.

    

    17.           Entire Agreement.
This Agreement contains the entire agreement of the parties relating to the
subject matter hereof, and supersedes in its entirety any and all understandings
or representations relating to the subject matter hereof, including the MWCB
SERP.

     

    18.           Alternate Form of
Annuity.  For purposes of Sections 4(b) or 5(a), the Executive
may, upon request made prior to commencement of payment of the benefit, elect to
have the Accumulation Account paid in the form of a joint and 50% survivor
annuity or a joint and 100% survivor annuity rather than a single-life annuity,
provided that such alternate form of annuity is the actuarial equivalent of the
annuity described in Section 4(b), for purposes of Section 409A of the Code and
Reg. 1.409A-2(b)(2)(ii).

    

    19.           Effectiveness.  Notwithstanding
anything to the contrary contained herein, this Agreement shall be subject to
consummation of the Merger in accordance with the terms of the Merger Agreement,
as the same may be amended by the parties thereto in accordance with its
terms.  In the event the Merger Agreement is terminated for any
reason, this Agreement shall be deemed null and void and the MWCB SERP shall
remain in effect in accordance with its terms.

    

    The
remainder of this page has been intentionally left blank

     
 

     

    
      
         

      

      
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    IN WITNESS WHEREOF, this
Agreement has been executed as of the date first above written.

    

    
      	 
      	 
      	
              EAST
      BOSTON SAVINGS BANK

            
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	
              BY:

            	
               /s/
      Richard J. Gavegnano

            
	 
      	 
      	 
      	
              Richard
      J. Gavegnano

            
	 
      	 
      	 
      	
              Chief
      Executive Officer

            
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	
              EXECUTIVE

            
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	
              By:

            	
              /s/
      Edward J. Merritt

            
	 
      	 
      	 
      	
              Edward
      J. Merritt

            
	 
      	 
      	 
      	 
      

    

    This SERP
is joined in by Meridian Interstate Bancorp, Inc. for purposes of fulfilling the
obligations of the Bank under the SERP.

    

    
      	 
      	
              MERIDIAN
      INTERSTATE BANCORP, INC.

            
	 
      	 
      
	 
      	 
      
	 
      	
              By:

            
	 
      	
              /s/
      Richard J. Gavegnano

            
	 
      	
              Richard
      J. Gavegnano

            
	 
      	
              Directorex10-19.htm

    Exhibit
10.19

    
 

    JOINT
BENEFICIARY DESIGNATION AGREEMENT THAT SUPERCEDES AND REPLACES THE AMENDED AND
RESTATED SPLIT DOLLAR AGREEMENT DATED JUNE 28, 2002

    

    

    

    

    
      	
              Insurer:

            	
              Relationship
      of Insured to Bank:

              Cigna
      Life Insurance Company

              Cigna
      Life Insurance Company

              Cigna
      Life Insurance Company

              Cigna
      Life Instance Company

              Cigna
      Life Insurance Company

              Cigna
      Life Insurance Company

              Travelers
      Life and Annuity Insurance Company

               

            
	
              Policy
      Number:

            	
              BOL000887Z
      
BOL000888Z 
BOL000889Z 
BOL000890Z 
BOL000891Z 
BOL000892Z
      
BOL000893Z 
7404437

               

            
	
              Bank:

               

               

            	
              Mt.
      Washington Co-Operative Bank

               

            
	
              Insured:

            	
              Edward
      J. Merritt

               

            
	
              Relationship
      of Insured to Bank:

            	
              Executive

               

            

    

     

    

     

    The
respective rights and duties of the Bank and the Insured in the above-referenced
policy shall be pursuant to the terms set forth below:

     

    The Bank
and the Executive are parties to a Split Dollar Agreement dated the 28th day
of June, 2002, between Mt. Washington Co-Operative Bank and Edward J. Merritt
that provides for the payment of certain benefits.  This Joint
Beneficiary Designation Agreement and the benefits provided hereunder shall
supercede and replace the existing Split Dollar Agreement and the-benefits
provided thereby.

     

    
      	
              I.

            	
              DEFINITIONS

            

    

     

    Refer to
the policy contract for the definition of any terms in this Agreement that are
not defined herein. If the definition of a term in the policy is inconsistent
with the definition of a term in this Agreement, then the definition of the term
as set forth in this Agreement shall supersede and replace the definition of the
terms as set forth in the policy.

     

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

     

    
      	
              II.

            	
              POLICY
      TITLE AND OWNERSHIP

            

    

     

    Title and
ownership shall reside in the Bank for its use and for the use of the Insured
all in accordance with this Agreement. The Bank alone may, to the extent of its
interest, exercise the right to borrow or withdraw on the policy cash
values.  Where the Bank and the Insured (or assignee, with the consent
of the Insured) mutually agree to exercise the right to increase the coverage
under the subject Joint Beneficiary Designation policy, then, in such event, the
rights, duties and benefits of the parties to such increased coverage shall
continue to be subject to the terms of this Agreement.

     

    
      	
              III.

            	
              BENEFICIARY
      DESIGNATION RIGHTS

            

    

     

    The
Insured (or assignee) shall have the right and power to designate a beneficiary
or beneficiaries to receive the Insured's share of the proceeds payable upon the
death of the Insured, and to elect and change a payment option for such
beneficiary, subject to any right or interest the Bank may have in such
proceeds, as provided in this Agreement.

     

    
      	
              IV.

            	
              PREMIUM PAYMENT METHOD AND
      BANK’S DUE DILIGENCE

            

    

     

    Subject
to the following, the Bank shall pay an amount equal to the planned premiums and
any other premium payments that might become necessary to keep the policy in
force. The Bank shall exercise due diligence in reviewing the financial
stability of the insurance company(ies) and the policy(ies) that are the subject
of this Agreement. If the Bank believes that the Insurer under the policy is
financially weak or that the policy is not performing well, the Bank may, at any
time, surrender the policy or substitute a different policy provided that the
Bank is under no obligation to invest in such replacement policy any more than
the proceeds available from the case surrender value of the original policy. The
Executive will cooperate by undertaking any necessary medical examination. If
the Bank chooses to surrender the above-referenced policy without replacing it
or the policy otherwise ceases to exist prior to the death to the Insured, the
Bank agrees to pay the Insured's name beneficiary(ies) the dollar amount as
projected, at the time of death, as of the Effective Date of this
Agreement.

     

    
      	
              V.

            	
              TAXABLE
      BENEFIT

            

    

     

    Annually
the Insured will receive a taxable benefit equal to the assumed cost of
insurance as required by the Internal Revenue Service.  The Bank (or
its administrator) will report to the Insured the amount of imputed income each
year on Form W-2 or its equivalent.

    
      
         

      

      
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              VI.

            	
              DIVISION
      OF DEATH PROCEEDS.

            

    

     

    Subject
to Paragraphs VII and IX herein, the division of the death proceeds of the
policy is as follows:

     

    
      	
               
      

            	
              A.

            	
              Should
      the Insured be employed by the Bank at  the time of death or
      terminated due to disability or retired at the time of death, the
      Insured's beneficiary(ies), designated in accordance with Paragraph III,
      shall be entitled to an amount equal to sixty-five percent (65%) of the
      net-at-risk insurance portion of the proceeds plus an amount equal to the
      Accrued Liability Retirement Account balance, as defined in Parargraph VI
      of the Executive Salary Continuation Agreement that Supercedes and
      Replaces the Amended and Restated Supplemental Executive Retirement
      Agreement Dated June 28, 2002, as of the date of death. This amount shall
      not exceed one hundred percent (100%) of the net-at-risk insurance portion
      of the proceeds. The net-at-risk insurance portion is the total proceeds
      less the cash value of the policy.

            

    

     

    
      	
               
      

            	
              B.

            	
              Should
      the Insured not be employed by the Bank at the time of death, the
      Insured's beneficiary(ies), designated in accordance with Paragraph III,
      shall be entitled to the percentage as set forth herein below of fifty
      percent (50%) of the net-at-risk insurance portion of the proceeds that
      corresponds to the number of full years the Insured has been employed by
      the Bank from the first (1st)
      anniversary date (August 23,1999) of first
  employment.

            

    

    
      	
               From
      the first (1st)

            	 
      
	
              Anniversary
      date of

            	 
      
	
              Employment with the Bank

            	
              Vested (to a maximum of
    100%)

            
	
              Fewer
      than 5

            	
              0%

            
	
              5
      years

            	
              20%

            
	
              6
      years

            	
              40%

            
	
              7
      years

            	
              60%

            
	
              8
      years

            	
              80%

            
	
              9
      or more years

            	
              100%

            

    

     

    
      	
               
      

            	
              C.

            	
              The
      Bank shall be entitled to the remainder of such
  proceeds.

            

    

     

    
      	
               
      

            	
              D.

            	
              The
      Bank and the Insured (or assignees) shall share in any interest due on the
      death proceeds on a pro rata basis as the proceeds due each respectively
      bears to the total proceeds, excluding any such
  interest.

            

    

     

    
      	
              V.

            	
              DIVISION
      OF THE CASH SURRENDER VALUE OF THE
POLICY

            

    

     

    The Bank
shall at all times be entitled to an amount equal to the policy's cash value, as
that term is defined in the policy contract, less any policy loans
and

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    

     

    unpaid
interest or cash withdrawals previously incurred by the Bank and any applicable
surrender charges. Such cash value shall be determined as of the date of
surrender or death as the case may be.

     

    
      	
              VIII.

            	
              RIGHTS
      OF PARTIES WHERE POLICY ENDOWMENT OR
ANNUITY

            

    

    ELECTION
EXISTS

     

    In the
event the policy involves an endowment or annuity element, the Bank's right and
interest in any endowment proceeds or annuity benefits, on expiration of the
deferment period, shall be determined under the provisions of this Agreement by
regarding such endowment proceeds or the commuted value of such annuity benefits
as the policy's cash value. Such endowment proceeds or annuity benefits shall be
considered to be like death proceeds for the purposes of division under this
Agreement.

     

    IX.           TERMINATION OF
AGREEMENT

     

    
      	
               
      

            	
              A.

            	
              This
      Agreement shall terminate upon the occurrence of any one of the
      following:

            

    

     

    
      	
               
      

            	
              1.

            	
              The
      Insured shall leave the employment of the Bank (voluntarily or
      involuntarily) prior to the fifth (5th)
      year anniversary of employment with
      the Bank;

            

    

     

    
      	
               
      

            	
              2.

            	
              The
      insured shall be discharged from employment with the Bank for cause. The
      term "for cause" shall mean any of the following that result in an adverse
      effect on the Bank: (i) gross negligence or gross neglect; (ii) the
      commission of a felony or gross misdemeanor involving fraud or dishonesty;
      (iii) the willful violation of any law, rule, or regulation (other than a
      traffic violation or similar offense); (iv) an intentional failure to
      perform stated duties; or (v) a breach of fiduciary duty involving
      personal profit; or

            

    

     

    
      	
               
      

            	
              3.

            	
              Surrender,
      lapse, or other termination of the Policy by the Bank, and subject to the
      Insured’s option as set forth
hereinbelow.

            

    

     

    
      	
               
      

            	
              B.

            	
              Upon
      such termination of this Agreement but prior to the termination of the
      policy by the Bank, the Insured (or assignee) shall have a fifteen (15)
      day option to receive from the Bank an absolute assignment of the policy
      in consideration of a cash payment to the Bank, whereupon this Agreement
      shall terminate.  Such cash payment referred to hereinabove
      shall be the greater of:

            

    

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    

     

    
      	
               
      

            	
              1.

            	
              The
      Bank's share of the cash value of the policy on the date of such
      assignment, as defined in this Agreement;
or

            

    

     

    
      	
               
      

            	
              2.

            	
              The
      amount of the premiums that have been paid by the Bank prior to the date
      of such assignment.

            

    

     

    
      	
               
      

            	
              C.

            	
              If;
      within said fifteen (15) day period, the Insured fails to exercise said
      option, fails to procure the entire aforestated cash payment, or dies,
      then the option shall terminate and the Insured (or assignee) agrees that
      all of the Insured's rights, interest and claims in the policy shall
      terminate as of the date of the termination of this
    Agreement.

            

    

     

    
      	
               
      

            	
              D.

            	
              The
      Insured expressly agrees that this Agreement shall constitute sufficient
      written notice to the Insured of the Insured's option to receive an
      absolute assignment of the policy as set forth
  herein.

            

    

     

    
      	
               
      

            	
              E.

            	
              Except
      as provided above, this Agreement shall terminate upon distribution of the
      death benefit proceeds in accordance with Paragraph VI
    above.

            

    

     

    
      	
              X.

            	
              INSURED'S
      OR ASSIGNEES ASSIGNMENT RIGHTS

            

    

     

    The
Insured may not, without the written consent of the Bank, assign to any
individual, trust or other organization, any right, title or interest m file
subject policy nor any rights, options, privileges or duties created under this
Agreement

     

    
      	
              XI.

            	
              AGREEMENT
      BINDING UPON THE PARTIES

            

    

     

    This
Agreement shall bind the Insured and the Bank, their heirs, successors, personal
representatives and assigns,

     

    
      	
              XII.

            	
              ADMINISTRATIVE AND CLAIMS
      PROVISIONS

            

    

     

    The
following provisions are part of this Agreement and are intended to meet the
requirements of the Employee Retirement Income Security Act of 1974
("EMSA");

     

    A.           Named Fiduciary and Plan
Administrator:

     

    The
'"Named Fiduciary and Plan Administrator of tins Joint Beneficiary Designation
Agreement shall be Mt. Washington Co-Operative Bank until its resignation or
removal "by the Board of Directors, As Named Fiduciary and Plan Administrator,
the Bank shall be responsible for the management, control, and administration of
this Agreement as established herein. The Named Fiduciary may delegate to others
certain aspects of the management and operation responsibilities of the
Agreement, including

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    

       
the employment of advisors and the delegation of any ministerial duties to
qualified individuals.

     

    B.        
   Basis of Payment of
Benefits:

     

    Direct
payment by the Insurer is the basis of payment of benefits under this Agreement,
with those benefits m turn being based on the payment of premiums as provided in
this Agreement.

     

    C.        
   Claim
Procedures:

     

    Claim
forms or claim information as to the subject policy can be obtained by
contacting Benmark, Inc. (800-544-6079). When the Named Fiduciary has a claim
which may be covered under the provisions described in the insurance policy,
they should contact the office named above, and they will either complete a
claim form and forward it to an authorized
representative of the Insurer or advise the named Fiduciary what further
requirements are necessary. The Insurer will evaluate and make a decision as to
payment. If the claim is payable, a benefit check will be issued in accordance
with the terms of this Agreement.

     

    In the
event that a claim is not eligible under the policy, the Insurer will notify the
Named Fiduciary of the denial pursuant to the requirements under the terms of
the policy. If the Named Fiduciary is dissatisfied with the denial of the claim
and wishes to contest such claim denial, they should contact the office named
above and they will assist in making an inquiry to the Insurer. All objections
to the Insurer’s actions should be in writing and submitted to the office named
above for transmittal to the insurer.

     

    
      	
              XIII.

            	
              GENDER

            

    

     

    Whenever
in this Agreement words are used in the masculine or neuter gender, they shall
be read and construed as in the masculine, feminine or neuter gender, whenever
they should so apply.

     

    
      	
              XIV.

            	
              INSURANCE COMPANY NOT A PARTY
      TO THIS AGREEMENT

            

    

     

    The
Insurer shall not be deemed a party to this Agreement, but will respect the
rights of the parties as herein developed upon receiving an executed copy of
this Agreement. Payment or other performance in accordance with the policy
provisions shall fully discharge the Insurer from any and all
liability.

     

    
      	
              XV.

            	
              CHANGE
      IN CONTROL

            

    

     

    A Change
in Control will be deemed to have occurred if:

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    

     

    1.)           During
any period of two (2) consecutive years (not including any period prior to the
execution of this Agreement), individuals who are Continuing Directors (as
hereinafter defined) cease for any reason to constitute at least a majority of
the Board of Directors of the Bank. For this purpose a "Continuing Director"
shall mean (x) an individual who was a director of the Bank at the beginning of
such period or (y) any new director (other than a director
designated by a person who has entered into, or made a bona-fide offer to enter
into, any Agreement with the Bank to effect an acquisition, merger or
consolidation) whose election by the Board or nomination for election by the
Bank's shareholders was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors at the beginning of
such period or whose election or nomination for election was previously so
approved;

     

    2.)           The
directors of the Bank approve a merger or consolidation of the Bank with any
other bank or corporation, other than (x) a merger or
consolidation in which individuals who are directors of the Bank immediately
prior to the transaction will continue to represent at least two-thirds (2/3) of
the directors of the institution resulting from the merger or consolidation (or,
if applicable, of any parent holding company), or (y) a reorganization the
primary purpose of which is to permit the Bank to reorganize into a mutual
holding company structure (without an issuance of minority shares to the public)
pursuant to Chapter 167H of the Massachusetts General Laws or any similar
provisions of law;

     

    3.)           The
Bank converts from mutual stock form (it being understood that a reorganization
into a mutual holding company structure shall not constitute conversion from
mutual to stock form unless there shall also be an issuance of minority shares
to the public);

     

    4.)           The
Bank effectuates a complete liquidation of the Bank or sale or disposition of
all or substantially all of its assets.

     

    Upon such
Change in Control, if the Insured's employment is terminated, except for cause,
within six (6) months prior or anytime subsequent to such mutual to stock
conversion and change of control, then the Insured shall be one hundred percent
(100%) vested in the benefits promised in this Agreement and, therefore, upon
the death of the Insured, the Insured's beneficiary(ies) (designated in
accordance with Paragraph III) shall receive the death benefit provided herein
as if the Insured had died while employed by the Bank [See Subparagraph VI
(A)].

     

    
      	
              XVI.

            	
              EFFECTIVE
      DATE

            

    

     

    The
Effective Date of this Agreement shall be September 1, 2004.

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    

     

    
      	
              XVII.

            	
              SEVERABILITY
      AND INTERPRETATION

            

    

     

    If a
provision of this Agreement is held to be invalid or unenforceable, the
remaining provisions shall nonetheless be enforceable according to their terms.
Further, in the event that any provision is held to be overbroad as written such
provision shall be deemed amended to narrow its application to the extent
necessary to make the provision enforceable according to law and enforced as
amended.

     

    
      	
              XVIII.

            	
              SUPERSEDE AND CONSTITUTE
      ENTIRE
      AGREEMENT

            

    

     

    This
Agreement shall supersede the Split Dollar Agreement dated the 28th day
of June, 2002, and shall constitute the entire agreement of the parties
pertaining to this particular Life Insurance Endorsement Method Split Dollar
Plan Agreement.

     

    
      	
              XIX.

            	
              APPLICABLE
      LAW

            

    

     

    The laws
of the Commonwealth of Massachusetts shall govern the validity and
interpretation of this Agreement.

     

    

    
      	
              Executed
      at, Boston, Massachusetts, this 20th day of
      September,
      2004.

            	 
      	 
      	 
      
	 
      	 
      	
              MT,
      WASHINGTON CO-OPERATIVE BANK

            
	 
      	 
      	
              Boston,
      MA

            
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	
              /s/
      Karen Shea

            	 
      	
              By:

            	
              /s/     George
      Custodio

            	
              SVP-CFO

            
	
              Witness

            	 
      	 
      	George Custodio	
              Title

            
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	
              /s/
      Karen Shea

            	 
      	
              By:

            	
              /s/     Edward
      J. Merritt

            
	
              Witness

            	 
      	 
      	
              Edward
      J. Merritt

            

    

    
 

    8

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