CENTRAL BANCORP, INC.
DEFERRED COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS
1. PURPOSE. The purpose of the Central Bancorp, Inc. Deferred Compensation
Plan for Non-employee Directors (the "Plan") is to provide Directors of Central
Co-operative Bank (the "Bank") and Central Bancorp, Inc. (the "Company") with
deferred benefits upon retirement and to allow Directors to participate in the
growth of the Company and the Bank through the acquisition of a beneficial
interest in Common Stock of the Company, par value $1.00 per share (the "Common
Stock").
2. ADMINISTRATION. The Plan shall be administered by an Administrative
Committee consisting of at least two non-employee directors (within the meaning
described in Rule 16b-3 under the Securities Exchange Act of 1934) appointed by
the Board of Directors of the Company and the Bank. The Administrative Committee
shall have the authority to adopt rules and regulations for carrying out the
Plan, and to interpret, construe and implement the provisions of the Plan.
3. ELIGIBILITY; EFFECTIVE DATE. Each member of the Board of Directors of
the Company or the Bank who is not an employee of the Company or the Bank
("Director") shall be entitled to participate in the Plan. The effective date of
the Plan is January 13, 2000 (the "Effective Date"). The Plan Year for the
initial period following adoption shall begin on the Effective Date and shall
end on March 31, 2000. Thereafter each Plan Year shall be the twelve-month
period beginning on April 1 and ending on March 31.
4. DIRECTORS' DEFERRAL. Each Director may elect to defer payment of all or
any part of the annual retainer fees, meeting fees, committee fees and other
payments for services rendered by the Director to the Company or the Bank on or
after the Effective Date ("Fees") pursuant to the provisions of this Plan. A
Director's election to defer Fees shall be in writing and shall be effective
upon receipt and acceptance by the Company and the Bank. For the initial Plan
Year, such election shall be made not later than thirty (30) days after the
Effective Date. In succeeding Plan Years, such election shall be made not later
than thirty-one (31) days prior to the commencement next succeeding Plan Year.
Any election may be revoked or changed if it is made in writing no later than
thirty-one (31) days prior to the commencement of the next Plan Year, but only
as to Fees to be earned at and after commencement of the next succeeding Plan
Year.
5. ESTABLISHMENT OF TRUST; DIRECTOR'S ACCOUNTS. In connection with the
adoption of the Plan, the Company and the Bank shall establish a nonqualified
trust (the "Rabbi Trust"). All Fees shall be deposited in the Rabbi Trust on
behalf of the participating Directors. The Company, the Bank and the Trustee of
the Rabbi Trust shall maintain a book account for each Director to which such
Fees shall be credited (the "Account"). Fees shall be deposited in the Rabbi
Trust and credited to a Director's Account on a quarterly basis within five (5)
business days after the end of the fiscal quarter during which the compensation
constituting such Fees was earned.
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In accordance with the terms of the Rabbi Trust, all Fees shall be invested
by the Trustee of the Rabbi Trust in shares of Common Stock. In the event that
the Trustee acquires Common Stock directly from the Company, the purchase price
of such shares shall be equal to the market value of such shares ("Market
Value"). If the Common Stock is listed on a national securities exchange
(including the NASDAQ National Market System) on the date in question, then the
Market Value per share shall be the average of the highest and lowest selling
price on such exchange on such date, or if there were no sales on such date,
then the Market Value per share shall be the mean between the bid and asked
price on such date. If the Common Stock is traded otherwise than on a national
securities exchange on the date in question, then the Market Value per share
shall be the mean between the bid and asked price on such date, or, if there is
no bid and asked price on such date, then on the next prior business day on
which there was a bid and asked price. If no such bid and asked price is
available, then the Market Value per share shall be its fair market value as
determined by the Administrative Committee, in its sole and absolute discretion.
Each Director's Account shall indicate the number of shares of Common Stock
that have been purchased and are being held in the Rabbi Trust on behalf of each
Director. Cash dividends paid on shares of Common Stock held in the Rabbi Trust
shall be used to purchase additional shares of Common Stock, and shall be
credited to the Directors' Accounts. Stock dividends, stock splits and other
distributions payable on Common Stock also will be held in the Rabbi Trust and
shall be credited to the Directors' Accounts. The Trustee may acquire, for
issuance under the Plan, up to the lesser of 25,000 shares or 1% of the
outstanding Common Stock, subject to adjustment in the event of a stock
dividend, stock split, recapitalization or similar event.
6. UNSECURED GENERAL CREDITOR. Notwithstanding anything to the contrary
contained herein, neither the Directors nor any beneficiaries designated by
them, nor any of their respective representatives or estates, shall have any
right, other than the right of an unsecured general creditor, against the
Company or the Bank with respect to the Directors' Accounts, the Rabbi Trust and
the shares of Common Stock held in the Rabbi Trust.
7. DISTRIBUTION.
(a) No withdrawals may be made from an Account by a Director except as
set forth in this Section. Subject to the discretion of the Trustee to
accelerate a distribution in the case of unforeseeable financial need or
hardship, the number of shares of Common Stock allocated to a Director's Account
shall be distributed in annual installments (as nearly equal in amount as
possible) over a three (3) year period after a Director ceases to be a Director
of the Company and the Bank; provided, however, that except as expressly
approved by the Committee, no Director shall receive any distributions of shares
of Common Stock until six months after he ceases to be a Director. In lieu of
distributing fractional shares of Common Stock, a Director will receive cash
equal to the fair market value of such fractional shares at the close of
business on the day preceding the day on which such distribution is made.
(b) In the event of the Director's death prior to the time at which
distributions have been made pursuant to Section 7(a), the beneficiary or
beneficiaries designated by the Director in writing to the Company pursuant to
the Beneficiary Designation Form attached
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hereto as Exhibit "A" prior to the Director's death or, failing such
designation, the Director's estate, shall receive the distributions from the
Director's Account in the same manner provided in Section 7(a).
8. NON-ASSIGNABLE. The right to receive shares of Common Stock under this
Plan shall not be subject to alienation, assignment, garnishment, execution,
levy, pledge, sale or transfer of any kind, except by will or by the laws of
decent and distribution, and any attempt to cause any such right to receive
shares of Common Stock to be so subjected, except by will or by the laws of
descent and distribution, shall not be recognized.
9. EXPENSES. The Company and the Bank shall pay all expenses in connection
with the Plan and the Rabbi Trust.
10. PARTIES. The terms of this Plan shall be binding upon the Company, the
Bank and their successors or assigns and each Director participating herein and
his beneficiaries, heirs, executors and administrators.
11. LIABILITY OF THE COMPANY AND THE BANK. Neither the Company, the Bank
nor any person acting on behalf of the Company or the Bank shall be liable for
any act performed or the failure to perform any act with respect to this Plan,
except in the event that there has been a judicial determination of willful
misconduct on the part of the Company or the Bank or such person.
12. TERMINATION; AMENDMENT. The Company and the Bank may terminate this
Plan on ninety (90) days' written notice to each Director participating herein.
A termination of the Plan shall have no effect other than to eliminate the right
of each Director to defer further compensation under this Plan. The Board of
Directors of the Company and the Bank may amend the Plan at any time and from
time to time; provided that any such amendments that require stockholder
approval under applicable laws and regulations shall also be approved by
stockholders of the Company at an annual or special meeting of such stockholders
to the extent required by and in accordance with any such laws or regulations.
No amendment shall, without the consent of a Director, adversely affect such
Director's rights under the Plan.
13. NOTICES; GOVERNING LAW.
(a) Notices, elections or designations by a Director to the Company or
the Bank hereunder shall be addressed to the attention of the Treasurer of the
Company or the Bank, as the case may be.
(b) This Agreement shall be construed and enforced in accordance with,
and governed by, the laws of the Commonwealth of Massachusetts.
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