<PAGE>


                                                                Exhibit 10.9














                            LONG-TERM INCENTIVE PLAN

                                       OF

                              PORT FINANCIAL CORP.
















                       Adopted on _______________, 2000
                        Effective as of January 1, 2000
<PAGE>

                               TABLE OF CONTENTS
                               -----------------

                                                                            Page
                                                                            ----


1.   General Purpose of Plan...................................................1
     -----------------------

2.   Definitions...............................................................1
     -----------
<TABLE>
     <S>    <C>                                                              <C>
     (a)    "Affiliate" .......................................................1
     (b)    "Bank".............................................................1
     (c)    "Board"............................................................1
     (d)    "Change in Control"................................................1
     (e)    "Code".............................................................3
     (f)    "Committee"........................................................3
     (g)    "Company"..........................................................3
     (h)    "Disability" ......................................................3
     (i)    "Disinterested Board Member" ......................................3
     (j)    "Effective Date"...................................................3
     (k)    "Eligible Employee"................................................3
     (l)    "Employer" ........................................................3
     (m)    "ERISA"............................................................3
     (n)    "GAAP" ............................................................3
     (o)    "Performance Award" ...............................................3
     (p)    "Performance Goal" ................................................3
     (q)    "Performance Period" ..............................................3
     (r)    "Performance Unit".................................................3
     (s)    "Plan" ............................................................3
     (t)    "Plan Year" .......................................................4
     (r)    "Retirement" ......................................................4
     (s)    "Share" ...........................................................4
</TABLE>
3.   Eligibility...............................................................4
     -----------
<TABLE>
     <S>    <C>                                                            <C>
     (a)    In General.........................................................4
     (b)    Performance Periods Ending After December 31, 2001.................4
     (c)    Performance Periods Ending On or Before December 31, 2001..........4
</TABLE>
4.   Administration............................................................4
     --------------
<TABLE>
     <S>    <C>                                                            <C>
     (a)    Committee..........................................................4
     (b)    Committee Action...................................................4
     (c)    Committee Responsibilities.........................................4
</TABLE>
5.   Performance Goals.........................................................5
     -----------------
<TABLE>
     <S>    <C>                                                            <C>
     (a)(i) Performance Periods Ending After December 31, 2001.................5
        (ii)Performance Periods Ending On or Before December 31, 2001..........5
     (b)    Criteria for Performance Goals.....................................5
     (c)    Adjustment of Performance Goals....................................6
</TABLE>
6.   Performance Awards; Performance Units.....................................6
     -------------------------------------
<TABLE>
     <S>    <C>                                                            <C>
     (a)    Performance Awards.................................................6

<PAGE>

     (b)    Performance Units..................................................6

7.   Payment of Performance Awards.............................................6
     -----------------------------
     (a)    Payment of Awards..................................................6
     (b)    Termination of Service.............................................6
     (c)    Substitution of Shares for Units...................................6
</TABLE>
8.   Amendment and Termination.................................................7
     -------------------------
<TABLE>
     <S>    <C>                                                            <C>
     (a)    Termination........................................................7
     (b)    Amendment..........................................................7
</TABLE>
9.   Miscellaneous.............................................................7
     -------------
<TABLE>
     <S>    <C>                                                            <C>
     (a)    Status as an Employee Benefit Plan.................................7
     (b)    No Right to Continued Employment...................................7
     (c)    Construction of Language...........................................7
     (d)    Governing Law......................................................8
     (e)    Headings...........................................................8
     (f)    Non-Alienation of Benefits.........................................8
     (g)    Taxes..............................................................8
     (h)    Notices............................................................8
</TABLE>
            (i)   Required Regulatory Provision................................8
                  -----------------------------
<PAGE>

                           LONG-TERM INCENTIVE PLAN
                           ------------------------

                                      OF
                                      --

                             PORT  FINANCIAL CORP.
                             ---------------------


 1.  General Purpose of Plan.
     -----------------------

     The purpose of the Long-Term Incentive Plan of Port Financial Corp. (the
"Plan") is to promote the growth and profitability of the Company, to provide
certain key officers of the Company and its Affiliates with an incentive to
achieve business objectives, to attract and retain individuals of outstanding
competence and to provide a means of compensating such individuals for their
contributions to the Company in a manner which permits such compensation to be
deductible by the Company for federal income tax purposes.

 2.  Definitions.
     -----------

     The following definitions shall apply for the purposes of this Plan, unless
a different meaning is plainly indicated by the context:

     (a) "Affiliate" means (i) a member of a controlled group of corporations
of which the Company is a member determined in accordance with section 1563(a)
of the Code determined without regard to Sections 1563(a)(4) and (e)(3)(C) or
(ii) an unincorporated trade or business which is under common control with the
Company as determined in accordance with section 414(c) of the Code and the
regulations issued thereunder.

     (b) "Bank" means Cambridgeport Bank and any successor thereto.

     (c) "Board" means the board of directors of the Company.

     (d) "Change in Control" means any of the following events:

          (i) the consummation of a reorganization, merger or consolidation of
the Company with one or more other persons, other than a transaction following
which:

              (A) at least 51% of the equity ownership interests of the entity
          resulting from such transaction are beneficially owned (within the
          meaning of Rule 13d-3 promulgated under the Securities Exchange Act of
          1934, as amended ("Exchange Act")) in substantially the same relative
          proportions by persons who, immediately prior to such transaction,
          beneficially owned (within the meaning of Rule 13d-3 promulgated under
          the Exchange Act) at least 51% of the outstanding equity ownership
          interests in the Company; and

              (B) at least 51% of the securities entitled to vote generally in
          the election of directors of the entity resulting from such
          transaction are beneficially owned (within the meaning of Rule 13d-3
          promulgated under the Exchange Act) in substantially the same relative
          proportions by persons who,
<PAGE>

          immediately prior to such transaction, beneficially owned (within the
          meaning of Rule 13d-3 promulgated under the Exchange Act) at least 51%
          of the securities entitled to vote generally in the election of
          directors of the Company;

          (ii)   the acquisition of all or substantially all of the assets of
     the Company or beneficial ownership (within the meaning of Rule 13d-3
     promulgated under the Exchange Act) of 25% or more of the outstanding
     securities of the Company entitled to vote generally in the election of
     directors by any person or by any persons acting in concert;

          (iii)  a complete liquidation or dissolution of the Company;

          (iv)   the occurrence of any event if, immediately following such
     event, at least 50% of the members of the Board of Directors of the Company
     do not belong to any of the following groups:

                 (A)  individuals who were members of the Board of Directors of
          the Company on the date of this Agreement; or

                 (B)  individuals who first became members of the Board of
          Directors of the Company after the date of this Agreement either:

                      (1)   upon election to serve as a member of the Board of
               Directors of the Company by affirmative vote of three-quarters of
               the members of such board, or of a nominating committee thereof,
               in office at the time of such first election; or

                      (2)   upon election by the shareholders of the Board of
               Directors of the Company to serve as a member of such board, but
               only if nominated for election by affirmative vote of three-
               quarters of the members of the Board of Directors of the Company,
               or of a nominating committee thereof, in office at the time of
               such first nomination;

          provided, however, that such individual's election or nomination did
          not result from an actual or threatened election contest (within the
          meaning of Rule 14a-11 of Regulation 14A promulgated under the
          Exchange Act) or other actual or threatened solicitation of proxies or
          consents (within the meaning of Rule 14a-11 of Regulation 14A
          promulgated under the Exchange Act) other than by or on behalf of the
          Board of Directors of the Company; or

          (v)    any event which would be described in section 2(d)(i), (ii),
     (iii) or (iv) if the term "Bank" were substituted for the term "Company"
     therein.

In no event, however, shall a Change of Control be deemed to have occurred as a
result of any acquisition of securities or assets of the Company, the Bank, or a
subsidiary of either of them, by the Company, the Bank, or any subsidiary of
either of them, or by any employee benefit plan maintained


                                      -2-
<PAGE>

by any of them. For purposes of this section 2(d), the term "person" shall have
the meaning assigned to it under sections 13(d)(3) or 14(d)(2) of the Exchange
Act.




          (e)    "Code" means the Internal Revenue Code of 1986, as amended.

          (f)    "Committee" means the Committee described in Section 4.

          (g)    "Company" means Port Financial Corp. and any successor thereto.

          (h)    "Disability" means a condition of total incapacity, mental or
physical, preventing further performance of duty with the Company and the Bank
which the Committee shall have deter  mined, on the basis of competent medical
evidence, is likely to be permanent.

          (i)    "Disinterested Board Member" means a member of the Board who
(i) is not a current employee of the Company or a subsidiary thereof, (ii) is
not a former employee of the Company who receives compensation for prior
services (other than benefits under a tax-qualified retirement plan) during the
taxable year, (iii) is not currently and has not been an officer of the Company
or a subsidiary thereof, (iv) does not receive consideration or remuneration
from the Company or any subsidiary thereof, either directly or indirectly, in
any capacity other than as a director and (v) does not possess an interest in
any other transaction, and is not engaged in a business relationship, for which
disclosure would be required pursuant to Item 404(a) or (b) of the proxy
solicitation rules of the Securities and Exchange Commission. A Disinterested
Board Member shall be an "outside director" as such term is defined under
section 162(m) of the Code.

          (j)    "Effective Date" means January 1, 2000.

          (k)    "Eligible Employee" means an employee of the Company, the Bank
or any Affiliates thereof whom the Committee selects to be eligible to receive a
Performance Award pursuant to the Plan.

          (l)    "Employer" means the Company, the Bank, any Affiliates, and,
with the prior approval of the Board and subject to such terms and conditions as
may be imposed by the Board, any other corporation or other business
organization or institution.

          (m)    "ERISA" means the Employee Retirement Income Security Act of
1974, as amended.

          (n)    "GAAP" means Generally Accepted Accounting Principals.

          (o)    "Performance Award" means  an award of Performance Units.

          (p)    "Performance Goal" means the preestablished, objective
performance goal or goals determined in accordance with section 5(a).

          (q)    "Performance Period" means a period of three (3) consecutive
Plan Years or such other period as the Committee, in its discretion, may
determine.

                                      -3-
<PAGE>

          (r)    "Performance Unit" means a unit of measure which is used to
compute the amount of a Performance Award, the value of which is preestablished
by the Committee and may be variable depending on the extent of achievement of
relevant Performance Goals.

          (s)    "Plan" means the Long-Term Incentive Plan of Port Financial
Corp., as amended from time to time, and may be referred to as the "Long-Term
Incentive Plan of Port Financial Corp."

          (t)    "Plan Year" means the calendar year.

          (r)    "Retirement" means retirement at or after the normal or early
retirement date set forth in any tax-qualified retirement plan of the Bank.

          (s)    "Share" means a share of common stock, par value $.01 per
share, of Port Financial, Corp. or any successor thereto.

 3.       Eligibility.
          -----------

          (a)   In General.   An individual who is a key employee of the
Employer or any of its subsidiaries shall be eligible to be considered for a
Performance Award under this Plan. An individual who is an Eligible Employee in
one Plan Year may be excluded from participation in a subsequent year at the
discretion of the Committee.

          (b)   Performance Periods Ending After December 31, 2001.   Except as
provided in section 3(c), no later than 90 days (or such other period prescribed
under Section 162(m) of the Code and the regulations thereunder) after the
beginning of each Plan Year, the Committee shall determine which individuals
shall be Eligible Employees for the Performance Period that begins in such Plan
Year.

          (c)   Performance Periods Ending On or Before December 31, 2001. Not
later than March 31, 2000, the Committee shall determine which individuals shall
be Eligible Employees for the Performance Periods ending December 31, 2000 and
December 31, 2001.

 4.       Administration.
          --------------

          (a)   Committee.   The Plan shall be administered by a Committee
consisting of the members of the Compensation Committee of the Company who are
Disinterested Board Members. If the Committee consists of fewer than two
Disinterested Board Members, the Board shall appoint to the Committee such
additional Disinterested Board Members as shall be necessary to provide for a
Committee consisting of at least two Disinterested Board Members.

          (b)   Committee Action.   The Committee shall hold such meetings, and
may make such administrative rules and regulations, as it may deem proper. A
majority of the members of the Committee shall constitute a quorum, and the
action of a majority of the members of the Committee present at a meeting at
which a quorum is present, as well as actions taken pursuant to the unanimous
written consent of all of the members of the Committee without holding a
meeting, shall be deemed to be actions of the Committee. All actions of the
Committee shall be final and conclusive and shall be binding upon the Employer
and all other interested parties. Any person dealing with the Committee shall be
fully protected in relying upon any written notice, instruction, direction or
other

                                      -4-
<PAGE>

communication signed by two members of the Committee or by a representative of
the Committee authorized to sign the same in its behalf.

          (c)   Committee Responsibilities.   Subject to the terms and
conditions of the Plan and such limitations as may be imposed from time to time
by the Board, the Committee shall be re sponsible for the overall management and
administration of the Plan and shall have such authority as shall be necessary
or appropriate in order to carry out its responsibilities, including, without
limitation, the authority:

                (i)    to interpret and construe the Plan, and to determine all
     questions that may arise under the Plan as to eligibility for participation
     in the Plan;

                (ii)   to adopt rules and regulations and to prescribe forms for
     the operation and administration of the Plan; and

                (iii)  to take any other action not inconsistent with the
     provisions of the Plan that it may deem necessary or appropriate.

 5.       Performance Goals.
          -----------------

          (a)(i)  Performance Periods Ending After December 31, 2001. Except as
provided in section 5(a)(i), the Committee shall establish, during the first 90
days of each Plan Year (or such other period specified in section 162(m) of the
Code and any regulations thereunder), a Performance Goal or Performance Goals
for each Eligible Employee based on one or more of the criteria set forth in
section 5(b).

          (ii)    Performance Periods Ending On or Before December 31, 2001.
Prior to March 31, 2000, the Committee shall establish the Performance Goal or
Performance Goals for each Eligible Employee for the Performance Periods ending
December 31, 2000 and December 31, 2001.

          (b)     Criteria for Performance Goals. The Performance Goals for a
Plan Year shall be based on one or more of the following criteria:

                  (1)    Basic earnings per common share,
                  (2)    Basic cash earnings per common share,
                  (3)    Diluted earnings per common share,
                  (4)    Diluted cash earnings per common share,
                  (5)    Net income,
                  (6)    Cash earnings,
                  (7)    Net interest income,
                  (8)    Non-interest income,
                  (9)    General and administrative expense to average assets
                         ratio
                  (10)   Cash general and administrative expense to average
                         assets ratio,
                  (11)   Efficiency ratio,
                  (12)   Cash efficiency ratio,
                  (13)   Return on average assets,
                  (14)   Return on average stockholders' equity,
                  (15)   Cash return on average stockholders' equity,
                  (16)   Return on average tangible stockholders' equity,

                                      -5-
<PAGE>

                  (17)   Cash return on average tangible stockholders' equity.

The Performance Goals may be based on the performance of the Company and the
Bank in the absolute or in relation to peer institutions designated by the
Committee.  Those Performance Goals which have meanings ascribed to them by
GAAP, shall have the meanings assigned to them under GAAP as in effect and
applied to the Company and the Bank on the date on which the Performance Goals
are established, without giving effect to any subsequent changes in GAAP, unless
the Committee specifically provides otherwise when it establishes the
Performance Goals.  Performance Goals based upon cash earnings or cash returns
shall refer to or be calculated based upon net income plus non-cash charges for
goodwill amortization and amortization relating to employee stock ownership
plans and restricted stock plans and related tax benefits.  Performance Goals
based upon cash general and administrative expenses shall refer to general and
administrative expenses, calculated in accordance with GAAP, adjusted to
eliminate non-cash amortization expenses related to employee stock ownership
plans and restricted stock plans.

          (c)     Adjustment of Performance Goals. Once established, the
Performance Goals for a particular Plan Year shall not be changed or adjusted
during such Plan Year, unless the Committee determines that such Performance
Goal shall be adjusted to decrease or eliminate the amount of an Eligible
Employee's Performance Award due to external changes or other unanticipated
business conditions; provided, however, that any such change or adjustment shall
                     --------  -------
comply with the requirements of Section 162(m) of the Code and any regulations
thereunder.

 6.       Performance Awards; Performance Units.
          -------------------------------------

          (a)     Performance Awards. An Eligible Employee shall be entitled to
receive a Performance Award pursuant to this Plan to the extent that the
preestablished Performance Goal determined by the Committee is satisfied. No
Performance Award to an Eligible Employee may exceed $600,000.

          (b)     Performance Units. A Performance Award shall consist of one or
more Performance Units. Each Performance Unit shall represent the right to
receive a payment in the amount of $1,000 upon the achievement of the
Performance Goal(s) established for the relevant Performance Period. If
determined by the Committee in its discretion, a Performance Unit may also
represent the right to receive an amount that is less than or more than $1,000
upon achievement that falls short of or exceeds the established Performance
Goal(s) for a Performance Period by prescribed tolerances.

 7.       Payment of Performance Awards.
          -----------------------------

          (a)     Payment of Awards. As soon as practicable following the last
day of each Plan Year, the Committee shall determine the extent of achievement
of the Performance Goal(s) established for the Performance Period ended in such
Plan Year, the value (if any) of each Performance Unit awarded for such
Performance Period and the value of each Performance Award and shall certify all
such determinations in writing. Each such Performance Award shall be paid in the
form and manner determined by the Committee, as soon as practicable after the
Committee determines the amount of such Performance Award.

          (b)     Termination of Service.  An Eligible Employee who terminates
employment with the Employer during any Plan Year or following the end of any
Plan Year, but prior to the payment of a Performance Award earned for such Plan
Year, shall forfeit any right to receive such

                                      -6-
<PAGE>

Performance Award; provided, however, that if such termination occurs after the
                   --------  -------
end of the Plan Year to which the Performance Award relates and such termination
is due to death, Disability, Retirement or a Change in Control, then, in such
case and only in such case, such Performance Award shall not be forfeited and
shall be paid as if no termination of service had occurred. In the event of a
termination of employment with the Employer due to a Change in Control, such
Performance Award shall be paid on the date of the Change in Control.

          (c)     Substitution of Shares for Units. Notwithstanding anything in
this Plan to the contrary, the Committee shall have the right, in its sole and
absolute discretion, to substitute options to purchase Shares and awards of
restricted Shares for Performance Units hereunder, subject to the following
terms and conditions:

          (i)     any such substitution shall be effected by written notice to
                  the Eligible Employee given on or before the date on which a
                  cash payment in settlement of the Performance Units would
                  otherwise be paid;

          (ii)    an option to purchase a Share shall be valued at $2.60 and an
                  award of a Restricted Share shall be valued at $7.00, such
                  that an award of 142.86 restricted Shares or options to
                  purchase 384.62 Shares shall provide full substitution for
                  each Performance Unit;

          (iii)   options to purchase Shares and/or awards of restricted Shares
                  granted in substitution for Performance Units shall vest
                  within five (5) years after the first day of the Performance
                  Period for which the substitution is to be effected;

          (iv)    the exercise price per Share of any options granted in
                  substitution for Performance Units shall be no greater that
                  the Fair Market Value of a Share on the date the substitution
                  is effected, and the acquisition price per Share of Shares
                  subject to any restricted stock award shall not exceed the par
                  value of a Share.

The substitution of options or restricted stock awards shall result in the
cancellation of an appropriate number of Performance Units without payment
therefor.

 8.       Amendment and Termination.
          -------------------------

          (a)     Termination.   The Board may suspend or terminate the Plan in
whole or in part at any time by giving written notice of such suspension or
termination to the Committee.

          (b)     Amendment.   The Board may amend or revise the Plan in whole
or in part at any time; provided, however, that, to the extent required to
                        --------  -------
comply with Section 162(m) of the Code and any regulations thereunder, no such
amendment or revision shall be effective if it amends a material term of the
Plan unless approved by the affirmative vote of a majority of the votes cast by
the shareholders of the Company at a meeting duly called and held for such
purpose.

 9.       Miscellaneous.
          -------------

                                      -7-
<PAGE>

          (a)     Status as an Employee Benefit Plan. This Plan is not intended
to satisfy the requirements for qualification under section 401(a) of the Code
or to satisfy the definitional require ments for an "employee benefit plan"
under section 3(3) of ERISA. It is intended to be a non-qualified incentive
compensation program that is exempt from the regulatory requirements of ERISA.
The Plan shall be construed and administered so as to effectuate this intent.

          (b)     No Right to Continued Employment.   Neither the establishment
of the Plan nor any provisions of the Plan nor any action of the Board or the
Committee with respect to the Plan shall be held or construed to confer upon any
Eligible Employee any right to a continuation of his or her position as an
employee of the Employer. The Employer reserves the right to dismiss any
Eligible Employee or otherwise deal with any Eligible Employee to the same
extent as though the Plan had not been adopted.

          (c)     Construction of Language.   Whenever appropriate in the Plan,
words used in the singular may be read in the plural, words used in the plural
may be read in the singular, and words importing the masculine gender may be
read as referring equally to the feminine or the neuter. Any reference to a
section number shall refer to a section of this Plan unless otherwise indicated.

          (d)     Governing Law.   The Plan shall be construed, administered and
enforced according to the laws of the Commonwealth of Massachusetts without
giving effect to the conflict of laws principles thereof, except to the extent
that such laws are preempted by federal law.

          (e)     Headings.   The headings of sections are included solely for
convenience of reference. If there is any conflict between such headings and the
text of the Plan, the text shall control.

          (f)     Non-Alienation of Benefits.   The right to receive a benefit
under the Plan shall not be subject in any manner to anticipation, alienation or
assignment, nor shall such right be liable for or subject to debts, contracts,
liabilities, engagements or torts.

          (g)     Taxes.   The Employer shall have the right to deduct from all
amounts paid by the Employer as a Performance Award under the Plan any taxes
required by law to be withheld with respect to such award.

          (h)     Notices.   Any communication required or permitted to be given
under the Plan, including any notice, direction, designation, comment,
instruction, objection or waiver, shall be in writing and shall be deemed to
have been given at such time as it is delivered personally or five days after
mailing if mailed, postage prepaid, by registered or certified mail, return
receipt requested, addressed to such party at the address listed below, or at
such other address as one such party may by written notice specify to the other
party:

                  (i)  If to the Committee:

                       Port Financial Corp.
                       c/o Cambridgeport Bank
                       689 Massachusetts Avenue
                       Cambridge, Massachusetts 02139
                       Attention:  Corporate Secretary
                                   -------------------

                                      -8-
<PAGE>

                  (ii) If to an Eligible Employee, to the Eligible Employee's
          address as shown in the Employer's records.

          (i)     Required Regulatory Provision. Notwithstanding anything herein
                  -----------------------------
contained to the contrary, any payments pursuant to this Plan, are subject to
and conditioned upon their compliance with section 18(k) of the Federal Deposit
Insurance Act and any regulations promulgated thereunder.







                                      -9-