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EXHIBIT 10.2  

 
 

SUPPLEMENTAL PENSION AGREEMENT    
    

        SUPPLEMENTAL PENSION AGREEMENT (the "Agreement") dated September 5, 1997, by and between Danversbank, a Massachusetts corporation (the "Company"), and L.
Mark Panella (the "Employee") is hereby amended this            day
of                        , 2006. 

W I T N E S S E T H: 

        WHEREAS,
the Employee is employed by the Company and is rendering valuable services to the Company; and 

        WHEREAS,
the Company has entered into this Agreement to induce the Employee to continue his service to the Company until retirement by providing a supplemental pension to him upon his
termination of employment from the Company after attaining at least age 65, or after attaining age 60 and completing at least 15 years of employment with the Company; 

        WHEREAS,
the Employee and the Company wish to amend this Agreement to reflect the requirements of Section 409A of the Internal Revenue Code of 1986, as amended (the "Code") to be
effective as of January 1, 2005. 

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

        1.    Employment; Current Compensation.    The Company may, but is not required to, employ the Employee, and the
Employee may, but is not required to, serve the Company as an employee, devoting his normal working time to the business and affairs of the Company in such position as the Company may from
time to time assign. Nothing contained in this Agreement shall be deemed to give the Employee the right to be retained in the employment of the Company or to diminish the right of the Company to
discharge the Employee at any time, nor shall this Agreement be deemed to give the Company the right to require the Employee to remain in its employ, nor shall it interfere with the Employee's right
to terminate his employment at any time. The Company shall pay to the Employee during the period of his employment such regular salary, bonuses and fringe benefits in such amounts as shall be mutually
agreed upon from time to time by the Company and the Employee. 

        2.    Supplemental Pension.    As additional deferred compensation for his services, the Company shall pay to the
Employee the following amounts: 

        (a)   If
the Employee shall remain in the employment of the Company until his Normal Retirement Date, then in such event, he shall be entitled to receive a supplemental
pension benefit, commencing on the first day of the month following his termination of employment on or after his Normal Retirement Date and continuing for 216 months, in the monthly amount
specified in Schedule 2(a) hereto. If the Employee shall die after his Normal Retirement Date but prior to receiving 216 such monthly payments, payments shall be continued to the Beneficiary of
the Employee until a total of 216 monthly payments have been made. The monthly amount of such supplemental pension may be increased as provided in Schedule 2(a). 

        (b)   If
the Employee shall terminate employment on or after his Early Retirement Date but prior to his Normal Retirement Date, then in such event he shall be entitled to
receive a supplemental pension benefit, commencing on the first day of the month following his termination of employment after such Early Retirement Date and continuing for 216 months, in a
monthly amount equal to the amount of monthly supplemental pension specified in Schedule 2(a) multiplied by a fraction the numerator of which is the number of full months of Employment the
Employee has worked for the Company from the date of this Agreement until his termination of Employment, and the denominator of which is the number of full months of Employment the Employee would have
worked for the Company from the date of this Agreement until his Normal Retirement Date. If the Employee should die after his Early Retirement Date but prior to 

 

receiving
216 such monthly payments, payments shall be continued to the Beneficiary of the Employee until a total of 216 monthly payments have been made. 

        (c)   Notwithstanding
Sections 2(a) and 2(b) above, the Employee may elect to receive the supplemental pension otherwise payable in 216 installments as provided in
Section 2(a) or Section 2(b) above, in a single lump sum payment or in 60 or 120 monthly installments following his termination of Employment
(with such lump sum payment or continuation of such installment payments to the Beneficiary in the event the Employee dies after his Early Retirement Date or Normal Retirement Date but prior to
receiving such lump sum payment or all such installment payments). If the Employee elects to receive a lump sum payment or 60 or 120 monthly installments in lieu of 216 monthly
installments, the amount of such lump sum payment or 60 or 120 monthly installments shall be the applicable amount specified in Schedule 2(c) hereto. Such election may be made in writing
filed with the Company prior to or during 2006 without restriction. Beginning in 2007, the Employee may change his distribution election by submitting a new written election to the Company, provided
that (i) such new election must be submitted at least one year prior to his benefit commencement date, (ii) such new election cannot take effect for at least 12 months, and
(iii) the new benefit commencement date must be delayed by at least five (5) years from the original benefit commencement date. 

        (d)   For
purposes of this Agreement, the following terms shall have the meanings indicated: 

        "Normal
Retirement Date" shall mean the date of the Employee's 65th birthday. 

        "Early
Retirement Date" shall mean the date the Employee has both (i) attained at least age 60, and (ii) completed at least 15 years of Employment. 

        "Beneficiary"
shall mean the Beneficiary designated in a writing executed by the Employee and delivered to the Company prior to the Employee's death to receive any death benefits payable
pursuant to Section 2(a) or Section 2(b) or Section 2(c) of this Agreement following the Employee's death, or if no such designation has been made or if no designated Beneficiary
survives the Employee, the Beneficiary shall be the Employee's estate. The Employee may designate a Beneficiary or change any prior designation of Beneficiary by filing with the Company a written
designation of Beneficiary signed by him on a form acceptable to the Company and received by the Company prior to the death of the Employee. The last such designation filed with the Company shall
revoke all previously filed designations and shall govern the designation of Beneficiary. 

        "Employment"
shall include all of the Employee's years and months of continuous full-time employment with the Company, commencing as of his date of hire and ending as of his
date of termination of full-time employment. The Employee's Employment shall not terminate because of, and his Employment shall include, periods of absence due to sickness or disability
(not to exceed six months), leave of absence specifically granted by the Company's Board of Directors, and periods of military duty during which the Employee's reemployment rights are guaranteed by
law. 

        (e)   In
the event the Employee is a "specified employee" within the meaning of Section 409A of the Code at the time of his separation from service, then,
notwithstanding anything to the contrary in the foregoing, no benefit shall be payable to the Employee until the earlier of (i) six (6) months and a day after the Employee's separation
from service, or (ii) the Employee's death. Any monthly payments that
would have been made after the Employee's separation from service but for the operation of this Section 2(e) shall be made in a lump sum on the date provided in this Section 2(e). 

        3.    Termination of Employment Prior to Retirement.    Any other provision hereof notwithstanding, in the event that
the Employee's Employment shall terminate for any reason (other than by reason of his total and permanent disability as provided in Section 4 hereof) prior to his Normal Retirement Date or
Early Retirement Date, this Agreement shall thereupon terminate, and neither the Employee nor his 

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heirs,
assigns or beneficiaries have any rights to any supplemental pension or any other payment or benefit under this Agreement. 

        4.    Total and Permanent Disability.    In the event that during the term of this Agreement the Employee shall become
totally and permanently disabled (as hereinafter defined), the Employee shall nevertheless be deemed to continue in Employment with the Company for purposes of this Agreement and this Agreement shall
continue in effect until the earliest to occur of (1) the Employee's death, (2) the Employee's Early Retirement Date (but only if the Employee became totally and permanently disabled
prior to his Early Retirement Date), (3) the Employee's Normal Retirement Date, or (4) the Employee's ceasing to be totally and permanently disabled. If the Employee shall become totally
and permanently disabled prior to his Early Retirement Date, he shall be deemed to continue in Employment for purposes of this Agreement until his Early Retirement Date, at which time he shall be
deemed to have terminated Employment and he shall thereupon be entitled to receive the supplemental pension payable in accordance with Section 2(b), subject to the Employee's election of an
optional method of payment in accordance with Section 2(c). If the Employee shall become totally and permanently disabled after his Early Retirement Date, he shall be deemed to continue in
Employment for purposes of this Agreement until his Normal Retirement Date; upon any such termination of Employment for purposes of this Agreement, the Employee shall be entitled to receive the
supplemental pension payable in accordance with Section 2(a), subject to the Employee's election of an optional method of payment in accordance with Section 2(c). For purposes of this
Agreement, the Employee shall be "totally and permanently disabled" if and only for so long as he is unable to engage in any substantial gainful activity by reason of any medically determinable
physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or he is, by reason of any medically
determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement
benefits for a period of not less than three months under a long-term disability plan or policy of the Company. 

        5.    Forfeiture for Cause.    Sections 2 and 4 of this Agreement notwithstanding, all rights to a supplemental
pension shall be forfeited by the Employee if the Company shall have terminated the Employee's Employment because of, or if following termination of Employment the Employee shall have engaged in, one
or more of the following: 

        (a)   Negligent
or intentional failure to perform his duties in a manner theretofore deemed acceptable; 

        (b)   Failure
to act in a manner which the Employee believes in good faith to be in the Company's best interests; 

        (c)   The
Employee's having been convicted or having pleaded guilty or nolo contendere to a felony or misdemeanor involving moral turpitude; 

        (d)   Fraud
or embezzlement with respect to funds of the Company; 

        (e)   Rendering
services for an organization or engaging directly or indirectly in any business which in the judgment of the Board of Directors of the Company is or becomes
competitive with the Company or which organization or the rendering of services to such organization is or becomes prejudicial to or in conflict with the interests of the Company; 

        (f)    Without
the prior written authorization of the Company, disclosure to anyone outside the Company or use other than in the Company's business, any confidential
information or material relating to the business of the Company, acquired by the Employee either during or after Employment with the Company. 

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Provided,
however, that the Employee shall be provided with at least 30 days to remedy, if possible, any such cause alleged by the Company before forfeiture of the Employee's rights to the
supplemental pension shall be effective. 

        Upon
receiving payment of the supplemental pension as provided in Section 2 or Section 4, the Employee shall certify in a manner acceptable to the Company that he is in
compliance with the terms of clauses (a) through (f) above. Failure of the Employee to comply with the provisions of clauses (a) through (f) prior to or during the
12 months after any payment of the supplemental pension shall cause such payment to be rescinded. The Company shall notify the Employee in writing of any such rescission within two years after
such payment. Within ten days after receiving a notice of rescission from the Company, the Employee shall pay to the Company in cash the amount of the payment previously received. 

        6.    No Funding; No Trust Created.    Nothing contained in this Agreement and no action taken pursuant hereto shall
create or be construed to create a trust of any kind. The Company shall not be obligated to establish any separate fund, account or reserve with respect to any supplemental pension, and all such
payments required hereunder shall be made solely from the general assets of the Company. To the extent any person acquires a right to receive any payments under this Agreement, such rights shall be no
greater than the rights of any unsecured general creditor of the Company. 

        Although
the Company is not obligated to invest in any specific fund or asset, the Company may, in its sole discretion, elect to purchase assets as a means for making, offsetting or
contributing in whole or in part to the payments which may become due and payable by the Company under this Agreement. If the Company shall elect to purchase any such assets, the Company shall be the
sole owner thereof with all incidents of ownership therein, and the Employee shall have no interest whatsoever in such assets and shall exercise none of the incidents of ownership thereof. 

        7.    Effect on Other Benefit Plans; Tax Matters.    Nothing contained in this Agreement shall preclude the Employee,
to the extent he is otherwise eligible, from participation in all group insurance, pension, profit sharing, severance pay, or other fringe benefit plans or programs which the Company may in its sole
and absolute discretion make available to its employees, but the Company shall not be required to establish, or maintain or continue any such plan or program. Any supplemental pension promised to the
Employee under this Agreement shall not be deemed salary or other compensation to the Employee for the purpose of computing contributions to or the benefits which he may be entitled to receive under
any other employee benefit plan or program of the Company unless such plan or program shall specifically include the supplemental pension in the computation of contributions or benefits thereunder. 

        The
amount of supplemental pension promised to the Employee hereunder shall not be included in the Employee's taxable income for federal income tax purposes prior to the year in which
such supplemental pension is actually paid, but part or all such amounts may be included in his income subject to Social Security, Medicare and any other applicable taxes for a year when such amounts
become nonforfeitable by the Employee. The Company shall report and/or withhold applicable taxes if the Company, upon advice of counsel, deems such reporting or withholding necessary in order to
comply with applicable laws. Payments of supplemental pension pursuant to Section 2 shall be reduced by applicable payroll and withholding taxes. 

        8.    Benefits Not Assignable.    Neither the Employee, nor his designated Beneficiary, nor any other Beneficiary
under this Agreement shall have any power or right to transfer, assign, anticipate, hypothecate or otherwise encumber any part or all of the amounts payable hereunder. No such amounts shall be subject
to seizure by any creditor of the Employee or any such Beneficiary by a proceeding at law or in equity and such amounts shall not be transferable by operation of law in the event of bankruptcy,
insolvency or death of the Employee or any Beneficiary hereunder. Any such attempted assignment or transfer shall be void and of no force or effect. 

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        9.    Fiduciary Provisions; Claims Procedure.    

        (a)   The
Company is hereby designated as the named fiduciary under this Agreement. The named fiduciary shall have authority to control and manage the operation and
administration of this Agreement, and it shall be responsible for establishing and carrying out a funding policy and method consistent with the objectives of this Agreement. 

        (b)   The
Company shall make all determinations concerning rights to benefits under this Agreement. Any decision by the Company denying a claim by the Employee or his
Beneficiary for benefits under this Agreement shall be stated in writing and delivered or mailed to the Employee or such Beneficiary. Such decision shall set forth the specific reasons for the denial,
written in a manner that may be understood without legal or actuarial counsel. In addition, the Company shall afford a reasonable opportunity to the Employee or such Beneficiary for a full and fair
review of the decision denying such claim. 

        10.    Binding Obligation.    The Company agrees that it will not merge or consolidate into or with another
corporation or sell substantially all of its assets to another corporation, firm or person unless such corporation, firm or person expressly agrees in writing to assume and discharge the duties and
obligations of the Company under this Agreement. 

        11.    Severability.    If any provision or part of a provision of this Agreement is finally declared to be invalid by
any tribunal of competent jurisdiction, such part shall be deemed automatically adjusted, if possible, to conform to the requirements for validity, but, if such adjustment is not possible, it shall be
deemed deleted from this Agreement as though it had never been included herein. In either case, the balance of any such provision and of this Agreement shall remain in full force and effect. 

        12.    Termination; Amendments.    This Agreement may be terminated at any time upon mutual agreement of the parties
in writing. This Agreement may not be amended orally, but only by agreement in writing signed by or on behalf of both of the parties. Benefits payable to the Employee under this Agreement shall not be
accelerated as a result of the termination of this Agreement except to the extent permitted by Section 409A of the Code. 

        13.    Successors.    This Agreement shall be binding upon and shall inure to the benefit of the Company, its
successors and assigns, and to the Employee, his Beneficiary, heirs, executors, administrators and legal representatives. 

        14.    Governing Law.    This Agreement, and the rights of the parties hereunder, shall be governed by and construed
according to the laws of the United States of America insofar as they may be applicable and otherwise according to the laws of the Commonwealth of Massachusetts. 

        IN
WITNESS WHEREOF, the parties have executed this Agreement, in duplicate, as of the day and year first above written. 

	ATTEST:	 	DANVERSBANK
	

 	
 	

By:	

 
	
	 	 	
 Title:
	

 	
 	

EMPLOYEE
	

 	
 	

 L. Mark Panella

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SCHEDULE 2(a)
  
    Supplemental Pension and Normal Retirement Date    
    

        The monthly amount of supplemental pension payable in accordance with Section 2(a) of the Agreement shall be seven thousand four hundred sixty three
dollars ($7,463). Notwithstanding anything in the Agreement that may suggest otherwise, such amount may not be increased or decreased (except by mutual agreement of the Company and the Employee in
accordance with Section 12 of the Agreement). 

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SCHEDULE 2(c)
  
    Optional Forms of Payment    
    

        The Employee may elect to receive the supplemental pension otherwise payable in two hundred sixteen (216) installments as provided in Section 2(a)
in a lump sum or in sixty (60) or one hundred twenty (120) monthly installments as provided in Section 2(c). The amount of each payment under these optional forms of payment shall
be the actuarial equivalent of the supplemental pension otherwise payable in two hundred sixteen (216) installments as provided in Section 2(a), to be calculated by the Company using
such actuarial factors as the Company determines are appropriate in its reasonable discretion. 

        If
payment is made pursuant to Section 2(b), the amount of each optional form of payment shall be reduced as provided in Section 2(b) based on the Employee's full months of
Employment from the date of the Agreement to his termination of Employment. 

        Actuarial
equivalence shall be calculated using an interest rate of 6 percent and the mortality table prescribed by Section 417(e) of the Code for qualified retirement
plans. 

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EXHIBIT 10.3  

 
 

DANVERSBANK
  PHANTOM STOCK PLAN
  
    As Amended and Restated as of January 1, 2005    
    

        The Danvers Savings Bank Phantom Stock Plan, as adopted by Danversbank (the "Bank"), a Massachusetts community bank, a wholly owned subsidiary of Danvers
Bancorp, Inc., a mutual form of organization (the "Company"), effective January 1, 2000, for the benefit of specified officers of the Bank, as previously amended and restated as of
January 1, 2003, is further amended and restated as of January 1, 2005 and renamed the Danversbank Phantom Stock Plan (the "Plan"). The purpose of the Plan is to retain Trustees and key
officers and to reward such Trustees and officers for their contributions and loyalty to the Bank by allowing them to share in the growth of the Bank through their good efforts, through appreciation
in the value of the Bank. 

Article I

Definitions and Construction  

        1.1    Definitions.    For purposes hereof, the following phrases or terms shall have the indicated meanings unless
otherwise clearly apparent from the context: 

	(a)
	"Account"
shall mean the bookkeeping account established and maintained by the Bank for each Participant. Notwithstanding any other provision of the Plan that may be construed to the
contrary, the amounts credited to a Participant's Account under the Plan are for measurement purposes only and shall not be considered or construed in any manner as an actual contribution or
investment.

	(b)
	"Beneficiary"
shall mean the person or persons designated by a Participant to receive any benefits payable hereunder in the event of the death of the Participant, or in the absence of
such a designated Beneficiary, the Participant's estate.

	(c)
	"Board
of Trustees" or "Board" shall mean the Board of Trustees of the Bank.

	(d)
	"Committee"
shall mean the Bank's compensation committee appointed to manage and administer the Plan and the individual Plan Agreements in accordance with the provisions of
Article XIII hereof. Except in the case of the President/CEO, no Participant in the Plan shall be appointed to the Committee.

	(e)
	"Date
of Grant" shall mean the Effective Date as stated in the Participant's Plan Agreement.

	(f)
	"Change-in-Control"
means the earliest date upon which one of the following events is consummated: the sale of all or substantially all of the assets of the
Company or the Bank; a merger of the Company or the Bank into another banking institution or entity where the Company or the Bank is not the surviving entity; issuance of 10% or more of the stock of
the Bank (other than to the Company or an entity controlled by the Company ("Intermediate Holding Company")) or of the Company or any Intermediate Holding Company (other than to the Company); or,
whenever individuals who are Continuing Directors of the Company or of the Bank (as defined hereafter) cease for any reason to constitute at least a majority of the Board of Directors of the Company
or the Bank, respectively. For this purpose, a "Continuing Director' shall mean (i) an individual who was a Director of the Company or a Trustee of the Bank as of January 1, 2000 (the
"Effective Date'), or (ii) any new Trustee or Director whose election to the Board of Trustees or Directors of the Company or the Bank, as the case may be, was approved by a vote of at least
two-thirds of the Trustees or Directors of the Company or the Bank, as applicable, then still in office who were either Trustees or Directors as of the Effective Date or whose election was
previously so approved.

	(g)
	"Eligible
Person" shall mean any Trustee or officer of the Bank. 

 

	(h)
	"Participant"
shall mean an Eligible Person who is specified by the Committee to participate in the Plan.

	(i)
	"Phantom
Share" shall mean a unit of value credited to the Accounts of Participants and distributed according to the terms of the Plan.

	(j)
	"Plan
Agreement" shall mean the written agreement that is entered into by and between the Bank and a Participant.

	(k)
	"Plan"
shall mean the Danversbank Phantom Stock Plan as set forth herein, as the same may be amended from time to time.

	(l)
	"Service
Period" shall mean the ensuing period of continuous service. 

Article II

Eligibility and Participation  

        2.1    Eligibility.    In order to be eligible for participation in the Plan, an Eligible Person must be selected by
the Committee, of the Board of Trustees, which, in its sole and absolute discretion, shall determine eligibility for participation in accordance with the purposes of the Plan. Participation in the
Plan shall be limited to the Participants. The Plan is intended to constitute a non-qualified, unfunded compensation plan for a select group of management or highly compensated employees
under Title I or the Employee Retirement Income Security Act of 1974, as amended and in effect from time to time ("ERISA"). 

        2.2    Acceptance.    In order to participate, an Eligible Person selected for participation in the Plan must sign a
Plan Agreement. The Eligible Person's participation in the Plan shall commence only upon execution of a Plan Agreement by both parties. 

Article III

Grants  

        3.1    Initial Grants.    Phantom Shares shall be granted to such Participants, as the Committee or CEO of the Bank
shall determine pursuant to section 6.3. If any Phantom Shares awarded under the Plan shall be forfeited or canceled, such Phantom Shares may again be awarded under the Plan. Phantom Shares
shall be granted at such time or times and shall be subject to such terms and conditions, in addition to the terms and conditions set forth in the Plan, as the Committee shall determine. 

        3.2    Additional Grants.    Additional Grants to a Participant may be awarded as the Committee or CEO of the Bank
shall, in their sole discretion, deem appropriate pursuant to Section 6.3. 

        3.3    Number of Units.    The Plan shall have a total of 870,418 phantom shares available for awards to Participants. 

Article IV

Accounts  

        4.1    Accounts.    Phantom Shares granted to a Participant shall be credited to the Account established and
maintained for such Participant. The Account of a Participant shall be the record of Phantom Shares granted to the Participant under the Plan and is solely for accounting purposes and shall not
require a segregation of any Bank assets. Each Phantom Share shall be valued by the Committee in the manner provided in Article VI. Each grant of Phantom Shares under the Plan to a Participant
and the value of such Phantom Shares as of the date of grant shall be communicated by the Committee in writing to the Participants within seven (7) days after the date of grant. 

2

 
Article V

Vesting  

        5.1    Vesting Schedule.    The Participant's Phantom Shares, which are not fully vested on the date of the
Participant's Plan Agreement, shall vest and become nonforfeitable according to the following schedule: 

        The
Initial Phantom Shares granted as of January 1, 2000, shall vest as follows: 

	Anniversary of

Effective Date

of Plan Agreement
	 	Cumulative Percentage

of Phantom Shares Vested
	 
	First	 	0	%
	Second	 	0	%
	Third	 	60	%
	Fourth	 	60	%
	Fifth	 	100	%

        All
subsequent Phantom Share grants, following the initial grant on January 1, 2000, shall vest according to the following schedule: 

	Anniversary of

Effective Date

of Plan Agreement
	 	Percentage of

Phantom Shares Vested
	 
	First	 	0	%
	Second	 	0	%
	Third	 	0	%
	Fourth	 	0	%
	Fifth	 	100	%

        Notwithstanding
the above vesting schedule, the intended service period for all grants made under this Plan shall be five (5) years. 

        The
vesting schedule for grants to Trustees shall be as follows: 

	Anniversary of

Effective Date

of Plan Agreement
	 	Percentage of

Phantom Shares Vested
	 
	First	 	0	%
	Second	 	0	%
	Third	 	100	%

        5.2    Other Vesting Events.    Notwithstanding the provisions of Section 5.2 above, effective as of
January 1, 2005, all Phantom Shares granted to a Participant shall become fully vested and non-forfeitable upon the Participant's termination of employment with the Bank due to such
Participant's death or disability, or retirement on or after attainment of age 65. In the case of a Participant who is a Trustee, all Phantom Shares shall become fully vested and
non-forfeitable upon the Participant's retirement after at least 12 years of service on the Board of Trustees of the Bank. For purposes of this Section 5.2, a Participant
will be considered disabled if, the Participant meets the qualifications to receive benefits under the Bank's Long Term Disability Plan. 

        5.3    Forfeitures.    Except as otherwise specified, Phantom Shares not vested on the date of a Participant's
termination of employment with the Bank shall be forfeited by the Participant. 

        5.4    Exceptions.    Notwithstanding any other contrary provisions contained in the Article V, the Committee,
at its discretion, may vary or accelerate the vesting schedule for an individual Participant. 

3

 

Article VI

Valuation of Phantom Shares  

        6.1    General Valuation.    For all purposes of the Plan, the Price Per Share (PPS) of a Phantom Share will be an
amount equal to the Price Per Share, as of the applicable date, as determined pursuant to Section 6.2 below or, in extraordinary circumstances only, such as adverse or favorable results of
operations due to economic conditions outside of the control of management, charitable contributions made by the Company or the Bank into a trust, etc., the Committee may in its sole discretion
determine the PPS in a fair and reasonable manner. 

        6.2    Price Per Share.    The PPS on January 1, 2000, shall be deemed to be $10.00 (ten dollars) based upon a
FYBV (defined below) as of December 31, 1999 of $34,816,724, and 3,481,672 Phantom Shares (PS). The PPS as of the first day of each subsequent year shall be the end of fiscal year book value
(FYBV) determined as of the preceding December 31 divided by 3,481,672 Phantom Shares (PS) pursuant to the following formula: 

FYBV ÷ PS =
PPS 

Where: 

FYBV
shall be the Retained Income, exclusive of any FASB 115 effect, as reported in the Danvers Bancorp. Inc. audited year-end consolidated financial statements; 

PS
is equal to 3,481,672 Phantom Shares issued at the Plan's inception; and, 

PPS
is the book value per share. 

        6.3    Participation.    Participation shall mean the number of Phantom Shares credited to a Participant's account
each year. Participation shall be determined in the following manner: 

	(a)
	In
the first year of the Plan, the Committee shall determine the number of Phantom Shares available for grant for that year, and in subsequent years the number of shares available for
grant shall be determined under subparagraph 6.3(c);

	(b)
	In
any year of participation by any Participant, Participation for such Participant shall be set by the Chief Executive Officer of the Bank. Participation for the Chief Executive
Officer in any year of participation shall be set by the Committee;

	(c)
	The
total number of shares available for grant in any year after the initial year of this Plan shall be equal to the number of Phantom Shares granted in the prior year adjusted upward
or downward, as the case may be, by a percentage equal to the average percentage change in FYBV from year-to-year for the two fiscal years prior to the current year of grant.
As an example, for grants to be made as of 1/1/02, the percentage applied to the number of Phantom Shares granted as of 1/1/01 will be equal to the average percentage change in FYBV from
(i) 12/31/99 to 12/31/00 and (ii) 12/31/00 to 12/31/01. In no case shall the number of shares available for grant in any year increase by more than sixteen percent (16.00%) from
year-to-year. 

At
the Committee's discretion, the Committee may disregard subparagraphs (a) and (b), above, and independently determine Participation in any year. 

Article VII

Payment of Benefits  

        7.1    Timing.    The Participant shall receive from the Bank the cash equal to the value of his/her vested Phantom
Shares upon each vesting according to one of the methods described in Section 7.2. 

4

 

Except
as provided in Section 7.2(c), the value of such Phantom Shares shall be based on the PPS determined as of the beginning of the fiscal year which contains such anniversary. 

        7.2    Methods of Payment.    Payment of vested Phantom Shares shall be made according to one of the following
methods: 

	(a)
	Lump
sum payment in cash equal to the value of 100% of the Participant's vested Phantom Shares as soon as practicable after the determination of such value.

	(b)
	Payment
of the cash equal to the value of from 10% to 100% of the Participant's vested Phantom Shares into a nonqualified deferred compensation plan of the Bank, with any undeferred
amounts paid according to subparagraph (a) above.

	(c)
	If
the Phantom Shares become payable pursuant to Section 5.2, they shall be valued as of the beginning of the fiscal year following retirement, death or disability and unless
otherwise deferred pursuant to Section 7.3, shall be paid in a lump sum in cash as soon as practicable thereafter, and in no event later than March 15 of the year following the year in
which retirement, death or disability occurs. 

        7.3    Election.    A Participant's election to defer must generally be made in the year prior to the year of grant of
Phantom Shares; provided, however, that Participants with non-vested Phantom Shares outstanding in 2005 may file a deferral election no later than March 15, 2005. 

        7.4    Payment Upon Change of Control.    Upon a Change-in-Control, this Plan shall terminate
and each Participant then employed by the Bank shall become fully vested in all of such Participant's outstanding Phantom Shares under the Plan and shall become immediately entitled to receive payment
of the value of the Phantom Shares in accordance with the provisions of this Article VII. For purposes of determining the final value of the Phantom Shares, the FYBV for the year of the
Change-in-Control shall be determined as of December 31 immediately prior to the year of the Change-in-Control. 

        7.5    Discharge.    Any payment made by the Bank in good faith in accordance with the provisions of this Plan and a
Participant's Plan Agreement shall fully discharge the Bank from all further obligations with respect to such payment. 

        7.6    Voting and Dividend Rights.    The Participant shall have no voting and dividend rights. 

        7.7    Withholding.    The Bank shall have the right to deduct from all amounts paid pursuant to the Plan, and if
necessary from any current or future compensation payable by the Bank to the Participant, any taxes required by law to be withheld with respect to such payments. 

Article VIII

Source of Benefits  

        8.1    Benefits Payable From General Assets.    Amounts payable hereunder shall be paid exclusively from the general
assets of the Bank, and no person entitled to payment hereunder shall have any claim, right, security interest, or other interest in any fund, trust, account, insurance contract, or asset of the Bank
from which payments may be made. The rights of each Participant hereunder shall be solely those of an unsecured creditor of the Bank. The Bank's liability for the payment of benefits hereunder shall
be evidenced only by this Plan and each Plan Agreement entered into between the Bank and a Participant. 

        8.2    Investments to Facilitate Payment of Benefits.    The Bank shall not be obligated to invest in any specific
asset or fund. However, in order to provide the means for the payment of any liabilities under this Plan, the Bank may elect to do so and, in such event, no Participant shall have any interest
whatever in such asset or fund. 

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        8.3    Trust.    Nothing contained in this Plan, and no action taken pursuant to the provisions of this Plan shall
create or be construed to create a trust of any kind or a fiduciary relationship between a Participant and the Bank, provided, however, that the Bank may establish a separate trust to accumulate funds
to discharge its obligations hereunder. Provided further, however, that such a trust does not cause the Plan to be considered to be funded for purposes of Title I of ERISA. The Participant and his
Beneficiary shall have no rights, title, or interest in any such trust. 

        8.4    Short-Term Deferral.    As payments under this Plan are made upon vesting and thus satisfy the
short-term deferral exception under Section 409A of the Internal Revenue Code of 1986, as amended, it is the Bank's intention that this Plan not be considered a deferred
compensation plan within the meaning of Section 409A. To the extent a Participant makes a deferral election under Section 7.2(b), only such deferrals to the Bank's Deferred Compensation
Plan are considered subject to the requirements of Section 409A. 

Article IX

Termination of Employment  

        9.1   Neither
this Plan nor a Participant's Plan Agreement, either singly or collectively, in any way obligates the Bank to continue the employment of a Participant, nor does
either limit the right of the Bank at any time and for any reason to terminate the Participant's employment. Termination of a Participant's employment with the Bank, for any reason, whether by action
of the Bank or the Participant, shall immediately terminate his participation in this Plan, except as otherwise expressly provided herein. In no event shall this Plan or a Plan Agreement, either
singly or collectively, by their terms or implications constitute an employment contract of any nature whatsoever. 

Article X

Termination, Amendment, Modification, or Supplement of Plan  

        10.1    Termination.    The Bank reserves the right to terminate, amend, modify, or supplement this Plan, or any Plan
Agreement, wholly or partially, from time to time, or at any time, provided, however, that except as provided in Section 10.2 below, no change shall be effective as to Phantom Shares under any
Plan Agreement then in effect without the written consent of such Participant. 

        10.2    Rights and Obligations Upon Termination.    Upon termination of this Plan, the Bank shall pay all vested
benefits as provided in this Plan. 

Article XI

Other Benefits and Agreements  

        11.1 The
benefits provided for a Participant and his Beneficiary hereunder and under such Participant's Plan Agreement are in addition to any other benefits available to
such Participant under any other program or plan of the Bank for its employees, and, except as may be otherwise expressly provided for, this Plan and the Plan Agreements entered into hereunder shall
supplement and shall not supersede, modify, or amend any other program or plan of the Bank or a Participant. Moreover, benefits under this Plan and the Plan Agreements entered into hereunder shall not
be considered compensation for the purpose of computing contributions or benefits under any welfare benefit plan maintained by the Bank or any of its subsidiaries or retirement plan maintained by the
Bank or any of its subsidiaries which is qualified under Section 401(a) of the Internal Revenue Code of 1986, as amended. 

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Article XII

Restrictions on Alienation of Benefits  

        12.1 No
right or benefit under this Plan or a Plan Agreement shall be subject to anticipation, alienation, sale, assignment, pledge, encumbrance, or charge; any attempt to
anticipate, alienate, sell, assign, pledge, encumber, or charge the same shall be void. No right or benefit under this Plan or under any Plan Agreement shall in any manner be liable for or subject to
the debts, contracts, liabilities, or torts of the person entitled to such benefit. 

Article XIII

Administration of This Program  

        13.1    Appointment of Committee.    The general administration of this Plan, and any Plan Agreements executed
hereunder, as well as the construction and the interpretation thereof, shall be vested in the Committee, the number and members of which shall be designated and appointed from time to time
by, and shall serve at the pleasure of, the Board of Directors. Any such member of the Committee may resign by notice in writing, filed with the secretary of the Committee. Vacancies shall be filled
promptly by the Board of Directors. Each person appointed a member of the Committee shall signify his acceptance by filing a written acceptance with the secretary of the Committee. 

        13.2    Committee Officials.    The Board of Directors may designate one of the members of the Committee as Chairman
and may appoint a secretary who need not be a member of the Committee. The secretary shall keep minutes of the Committee's proceedings and all date, records, and documents relating to the Committee's
administration of this Plan and any Plan Agreement executed hereunder. The Committee may appoint from its number such subcommittees with such powers as the Committee shall determine and may authorize
one or more of its members or any agent to execute or deliver any instrument or make any payment on behalf of the Committee. 

        13.3    Committee Action.    All resolutions or other actions taken by the Committee shall be the vote of a majority
of those present at a meeting at which a majority of the members are present, or in writing by all the members at the time in office if they act without a meeting. 

        13.4    Committee Rules and Powers—General.    Subject to the provisions of this Plan, the Committee shall
from time to time establish rules, forms, and procedures for the administration of this Plan, including Plan Agreements. Except as herein otherwise expressly provided, the Committee shall have the
exclusive right to interpret this Plan and any Plan Agreements and to decide any and all matters arising thereunder or in connection with the administration of this Plan and any Plan Agreements, and
it shall endeavor to act, whether by general rules or by particular decisions, so as not to discriminate in favor of or against any person. Such decisions, actions, and records of the Committee shall
be conclusive and binding upon the Bank and all persons having or claiming to have any right or interest in or under this Plan. 

        13.5    Reliance on Certificates, etc.    The members of the Committee and the officers and Directors of the Bank
shall be entitled to rely on all certificates and reports made by any duly authorized legal counsel. Such legal counsel may be counsel for the Bank. 

        13.6    Liability of Committee and the CEO.    No member of the Committee nor the CEO shall be liable for any act or
omission of any other member of the Committee or the CEO or for any act or omission on his part, excepting only his own willful misconduct. The Bank shall indemnify and save harmless each member of
the Committee and the CEO against any and all expenses and liabilities arising out of his membership on the Committee or acts pursuant this Plan to the fullest extent of the law, excepting only
expenses and liabilities arising out of his own willful misconduct. Expenses against which a member of the Committee or the CEO shall be indemnified hereunder shall include, without limitation, the
amount of any settlement or judgment, costs, counsel fees, and related charges 

7

 

reasonably
brought or settlement thereof. The foregoing right of indemnification shall be in addition to any other rights to which any such member of the Committee or the CEO may be entitled as a
matter of law. 

        13.7    Determination of Benefits.    In addition to the powers herein above specified, the Committee shall have the
power to compute and certify, under this Plan and any Plan Agreement, the amount and kind of benefits from time to time payable to Participants and their Beneficiaries and to authorize all
disbursements for such purpose. 

        13.8    Information to Committee.    To enable the Committee to perform its functions, the Bank shall supply full and
timely information to the Committee on all matters relating to the Compensation of all Participants, their retirement, death, or other cause for termination of employment, and such other pertinent
facts as the Committee may require. 

        13.9    Manner and Time of Payment of Benefits.    The Committee shall have the power, in its sole and absolute
discretion, to change the manner and time of payment of benefits to be made to a Participant or his Beneficiary from that set forth in the Participant's Plan Agreement. 

Article XIV

Miscellaneous  

        14.1    Execution of Receipts and Releases.    Any payment to a Participant, a Participant's legal representative, or
Beneficiary in accordance with the provisions of this Plan or any Plan Agreement executed hereunder shall, to the extent thereof, be in full satisfaction of all claims hereunder against the Bank. The
Bank may require such Participant, legal representative, or Beneficiary, as a condition precedent to such payment, to execute a receipt and release therefor in such form as it may determine. 

        14.2    No Guarantee of Interests.    Neither the Committee nor any of its members guarantee the payment of any
amounts which may be or become due to any person or entity under this Plan or any Plan Agreement executed hereunder. The liability of the Bank to make any payment under this Plan or any Plan Agreement
executed hereunder is limited to the then available assets of the Bank. 

        14.3    Bank Records.    Records of the Bank as to a Participant's employment, termination of employment, and other
related matters shall be conclusive on all persons and entities, unless determined to be incorrect. 

        14.4    Evidence.    Evidence required of anyone under this Plan and any Plan Agreement executed hereunder may be by
certificate, affidavit, document, or other information which the person or entity acting on it considers pertinent and reliable, and signed, made, or presented by the proper party or parties. 

        14.5    Notice.    Any notice which shall be or may be given under this Plan or a Plan Agreement executed hereunder
shall be in writing and shall be mailed by United States mail, postage prepaid. If notice is to be given to the Bank, such notice shall be addressed to the Bank, at its principal office shown on such
Participant's Plan Agreement. 

        14.6    Change of Address.    Any party may, from time to time, change the address to which notices shall be mailed by
giving written notice of such new address. 

        14.7    Effect of Provisions.    The provisions of this Plan and of any Plan Agreement executed hereunder shall be
binding upon the Bank and its successors and assigns and upon a Participant, his Beneficiary, assigns, heirs, executors, and administrators. 

        14.8    Compliance with Regulatory Requirements.    Nothing herein shall be deemed to obligate the Company or the Bank
to make a payment hereunder in violation of any statute or regulatory order or directive applicable to the Company or the Bank. 

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        14.9    Headings.    The titles and headings of Articles and Sections are included for convenience of reference only
and are not to be considered in the construction of the provisions hereof or any Plan Agreement executed hereunder. 

        14.10    Governing Law.    All questions arising with respect to this Plan and any Plan Agreement executed hereunder
shall be determined by reference to the laws of the Commonwealth of Massachusetts in effect at the time of their adoption and execution, respectively. 

        14.11    Dispute Resolution/Arbitration.    The parties shall attempt in good faith to resolve any claim, controversy,
or dispute of whatever nature arising between the parties (a "Dispute"), including, but not limited to, those arising out of or relating to this Plan, the Plan Agreement, or any other related
documents, whether arising out of contract, tort, statute, or otherwise, promptly by negotiations between the parties. If the Dispute cannot be settled through direct negotiations, the parties shall
participate in mediation administered by the American Arbitration Association under its Commercial Mediation Rules before resorting to arbitration. Thereafter, any unresolved Dispute shall be settled
by binding arbitration administered by the American Arbitration Association in accordance with its Commercial Arbitration Rules. The arbitration proceedings shall be conducted before a neutral
arbitrator who is a member of the Bar of the Commonwealth of Massachusetts, has been actively engaged in the practice of law for at least fifteen (15) years and has substantial experience in
connection with business transactions and interpretation of contracts. Upon the request of either party, the arbitrator's award shall include findings of fact and conclusions of law. Either party may
seek review of the arbitrator's award before an arbitration review panel, comprised of three (3) arbitrators qualified in the same manner as the initial arbitrator (as set forth above). Review
by the arbitration review panel must be requested in writing within ten (10) days of the initial arbitrator's award of such review shall be waived. The arbitration review panel shall be
entitled to review all findings of fact and conclusions of law and conduct the review process in such manner as deemed appropriate by the arbitration review panel. The arbitration review panel shall
have authority to modify the award under review in its discretion. Unless otherwise deemed appropriate by the arbitrator(s), the prevailing party shall be entitled to an award of all reasonable
out-of-pocket costs and expenses (including attorneys' and arbitrators' fee) related to the arbitration proceeding. The decision of the arbitrator(s), after exhausting the
review provided above, shall be deemed the "arbitration award" and may be enrolled as a final judgment as otherwise provided by law. 

Approved:

	By:	 	
	 	 
	

Date:	
 	

	
 	

 

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QuickLinks

DANVERSBANK PHANTOM STOCK PLAN As Amended and Restated as of January 1, 2005

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