Exhibit
      10.1





EMPLOYMENT
      AGREEMENT





This
      AGREEMENT (the "Agreement") is made as of September 30, 1997 (the "Effective
      Date"), by and between Northway Financial, Inc., a New Hampshire chartered
      corporation ("Northway"), The Berlin City Bank, a New Hampshire chartered bank
      and wholly owned subsidiary of Northway with its principal offices located
      in
      Berlin, New Hampshire (Northway and The Berlin City Bank shall hereinafter
      collectively be referred to as the "Employer"), and William J. Woodward (the
      "Executive"). In consideration of the mutual covenants contained in this
      Agreement, the Employer and the Executive agree as follows:





1.
      Employment. The Employer agrees to employ the Executive and the Executive agrees
      to be employed by the Employer on the terms and conditions set forth in this
      Agreement.





2.
      Capacity. The Executive shall serve the Employer as Chairman, President and
      Chief Executive Officer, subject to election by the Board of Directors of
      Northway or The Berlin City Bank, as the case may be (the "Board of Directors"),
      and as a member of the Board of Directors, subject to election by the
      shareholders of the Employer. The Executive shall also serve the Employer in
      such other or additional offices as the Executive may be requested to serve
      by
      the Board of Directors. In such capacity or capacities, the Executive shall
      perform such services and duties in connection with the business, affairs and
      operations of the Employer as may be assigned or delegated to the Executive
      from
      time to time by or under the authority of the Board of Directors.





3.
      Term.
      Subject to the provisions of Section 6, the term of employment pursuant to
      this
      Agreement (the "Term") shall be for three (3) years from the Effective Date
      and
      shall be renewed automatically for periods of one (1) year commencing at the
      first anniversary of the Effective Date and on each subsequent anniversary
      thereafter, unless either the Executive or the Employer gives written notice
      to
      the other not less than sixty (60) days prior to the date of any such
      anniversary of such party's election not to extend the Term.





4.
      Compensation and Benefits. The regular compensation and benefits payable to
      the
      Executive under this Agreement shall be as follows:





(a)
      Salary. For all services rendered by the Executive under this Agreement, the
      Employer shall pay the Executive a salary (the "Salary") at an annual rate
      consistent with the letter agreement, dated March 14, 1997, by and between
      Fletcher W. Adams and William J. Woodward and attached hereto as Exhibit A,
      subject to increase from time to time in the discretion of the Board of
      Directors. The Salary shall be payable in periodic installments in accordance
      with the Employer's usual practice for its senior executives.





(b)
      Bonus
      or Similar Incentive Programs. The Executive shall be entitled to participate
      in
      any incentive or bonus program established by the Board of Directors with such
      terms as may be established in the sole discretion of the Board of Directors;
      or





(c)
      Regular Benefits. The Executive shall also be entitled to participate in any
      employee benefit plans, medical insurance plans, life insurance plans,
      disability income plans, retirement plans, vacation plans, expense reimbursement
      plans and other benefit plans which the Employer may from time to time have
      in
      effect for all or most of its senior executives. Such participation shall be
      subject to the terms of the applicable plan documents, generally applicable
      policies of the Employer, applicable law and the discretion of the Board of
      Directors or any administrative or other committee provided for in or
      contemplated by any such plan. Nothing contained in this Agreement shall be
      construed to create any obligation on the part of the Employer to establish
      any
      such plan or to maintain the effectiveness of any such plan which may be in
      effect from time to time.





(d)
      Taxation of Payments and Benefits. The Employer shall undertake to make
      deductions, withholdings and tax reports with respect to payments and benefits
      under this Agreement to the extent that it reasonably and in good faith believes
      that it is required to make such deductions, withholdings and tax reports.
      Payments under this Agreement shall be in amounts net of any such deductions
      or
      withholdings. Nothing in this Agreement shall be construed to require the
      Employer to make any payments to compensate the Executive for any adverse tax
      effect associated with any payments or benefits or for any deduction or
      withholding from any payment or benefit.





(e)
      Exclusivity of Salary and Benefits. Unless approved by the Board of Directors,
      the Executive shall not be entitled to any payments or benefits other than
      those
      provided under this Agreement.





5.
      Extent
      of Service. During the Executive's employment under this Agreement, the
      Executive shall, subject to the direction and supervision of the Board of
      Directors, devote the Executive's, best efforts and business judgment, skill
      and
      knowledge to the advancement of the Employer's interests and to the discharge
      of
      the Executive's duties and responsibilities under this Agreement. The Executive
      shall not engage in any other business activity, except as may be approved
      by
      the Board of Directors; provided that nothing in this Agreement shall be
      construed as preventing the Executive from:





(a)
      investing the Executive's assets in any company or other entity in a manner
      not
      prohibited by Section 7(d) and in such form or manner as shall not require
      any
      material activities on the Executive's part in connection with the operations
      or
      affairs of the companies or other entities in which such investments are made;
      or





(b)
      engaging in religious, charitable or other community or non-profit activities
      that do not impair the Executive's ability to fulfill the Executive's duties
      and
      responsibilities under this Agreement; or





(c)
      continuing to advise and consult regularly the activities of Vaillancourt &
Woodward, Inc. in his current positions with the same, provided that such advice
      and consultation does not unreasonably interfere with the performance of the
      Executive's duties hereunder.





6.
      Termination and Termination Benefits. Notwithstanding the provisions of Section
      3, the Executive's employment under this Agreement shall terminate under the
      following circumstances set forth in this Section 6.





(a)
      Termination by the Employer for Cause. The Executive's employment under this
      Agreement may be terminated for cause without further liability on the part
      of
      the Employer effective immediately upon a two-thirds (2/3) vote of the Board
      of
      Directors and written notice to the Executive. Only the following shall
      constitute "cause" for such termination:





(i)
      dishonest statements or acts of the Executive with respect to the business
      of
      the Employer or any affiliate of the Employer;





(ii)
      the
      commission by or indictment of the Executive for (A) a felony or (B) any
      misdemeanor involving moral turpitude, deceit, dishonesty or fraud
      ("indictment," for these purposes, meaning an indictment, probable cause hearing
      or any other procedure pursuant to which an initial determination of probable
      or
      reasonable cause with respect to such offense is made);





(iii)
      material failure to perform to the reasonable satisfaction of the Board of
      Directors a substantial portion of the Executive's duties and responsibilities
      assigned or delegated under this Agreement, which failure continues, in the
      reasonable judgment of the Board of Directors, for sixty (60) days after written
      notice given to the Executive by the Board of Directors;





(iv)
      gross negligence, willful misconduct or insubordination of the Executive with
      respect to the Employer or any affiliate of the Employer; or





(v)
      material breach by the Executive of any of the Executive's obligations under
      this Agreement.





(b)
      Termination by the Executive. The Executive's employment under this Agreement
      may be terminated by the Executive by written notice to the Board of Directors
      at least thirty (30) days prior to such termination.





(c)
      Termination by the Employer Without Cause. Subject to the payment of Termination
      Benefits pursuant to Section 6(d), the Executive's employment under this
      Agreement may be terminated by the Employer without cause upon written notice
      to
      the Executive by a two-thirds (2/3) vote of the Board of Directors.





(d)
      Certain Termination Benefits. Unless otherwise specifically provided in this
      Agreement or otherwise required by law, all compensation and benefits payable
      to
      the Executive under this Agreement shall terminate on the date of termination
      of
      the Executive's employment under this Agreement. Notwithstanding the foregoing,
      in the event of termination of the Executive's employment with the Employer
      pursuant to Section 6(c) above, the Employer shall provide to the Executive
      the
      following termination benefits ("Termination Benefits"):





(i)
      continuation of the Executive's Salary at the rate then in effect pursuant
      to
      Section 4(a); and





(ii)
      continuation of group health plan benefits to the extent authorized by and
      consistent with 29 U.S.C. ss. 1161 et seq. (commonly known as "COBRA"), with
      the
      cost of the regular premium for such benefits shared in the same relative
      proportion by the Employer and the Executive as in effect on the date of
      termination.





The
      Termination Benefits set forth in (i) and (ii) above shall continue effective
      until the expiration of the Term; provided that in the event that the Executive
      commences any employment or self-employment during the period during which
      the
      Executive is entitled to receive Termination Benefits (the "Termination Benefits
      Period"), the remaining amount of Salary due pursuant to Section 6(d)(i) for
      the
      period from the commencement of such employment (other than in connection with
      the activities of Vaillancourt & Woodward, Inc.) or self-employment to the
      end of the Termination Benefits Period shall be reduced by one-half of the
      salary the Executive receives from such employment or self-employment and,
      if
      the Executive receives benefits from such employment or self-employment
      comparable to those benefits provided by the Employer, the payments provided
      under Section 6(d)(ii) shall cease effective as of the date of commencement
      of
      such employment or self-employment. The Employer's liability for Salary
      continuation pursuant to Section 6(d)(i) shall be reduced by the amount of
      any
      severance pay due or otherwise paid to the Executive pursuant to any severance
      pay plan or stay bonus plan of the Employer. Notwithstanding the foregoing,
      nothing in this Section 6(d) shall be construed to affect the Executive's right
      to receive COBRA continuation entirely at the Executive's own cost to the extent
      that the Executive may continue to be entitled to COBRA continuation after
      the
      Executive's right to cost sharing under Section 6(d)(ii) ceases. The Executive
      shall be obligated to give prompt notice of the date of commencement of any
      employment or self-employment during the Termination Benefits Period and shall
      respond promptly to any reasonable inquiries concerning any employment or
      self-employment in which the Executive engages during the Termination Benefits
      Period.








(e)
      Disability. If the Executive shall be disabled so as to be unable to perform
      the
      essential functions of the Executive's then existing position or positions
      under
      this Agreement with or without reasonable accommodation, the Board of Directors
      of Northway by a two-thirds (2/3) vote may remove the Executive from any
      responsibilities and/or reassign the Executive to another position with the
      Employer for the remainder of the Term or during the period of such disability.
      Notwithstanding any such removal or reassignment, the Executive shall continue
      to receive the Executive's full Salary (less any disability pay or sick pay
      benefits to which the Executive may be entitled under the Employer's policies)
      and benefits under Section 4 of this Agreement (except to the extent that the
      Executive may be ineligible for one or more such benefits under applicable
      plan
      terms) for a period of time equal to the lesser of (i) one (1) year; or (ii)
      the
      remainder of the Term. If any question shall arise as to whether during any
      period the Executive is disabled so as to be unable to perform the essential
      functions of the Executive's then existing position or positions with or without
      reasonable accommodation, the Executive may, and at the request of the Employer
      shall, submit to the Employer a certification in reasonable detail by a
      physician selected by the Employer to whom the Executive or the Executive's
      guardian has no reasonable objection as to whether the Executive is so disabled
      or how long such disability is expected to continue, and such certification
      shall for the purposes of this Agreement be conclusive of the issue. The
      Executive shall cooperate with any reasonable request of the physician in
      connection with such certification. If such question shall arise and the
      Executive shall fail to submit such certification, the Employer's determination
      of such issue shall be binding on the Executive. Nothing in this Section 6(e)
      shall be construed to waive the Executive's rights, if any, under existing
      law
      including, without limitation, the Family and Medical Leave Act of 1993, 29
      U.S.C. ss.2601 et seq. and the Americans with Disabilities Act, 42 U.S.C.
      ss.12101 et seq.





(f)
      Termination Following a Change of Control. If there is a Change of Control,
      as
      defined in Section 6(f)(i) below, during the Term, the provisions of this
      Section 6(f) shall apply and shall continue to apply throughout the remainder
      of
      the term of this Agreement. If, within eighteen (18) months following a Change
      of Control, the Executive's employment is terminated by the Employer or the
      Executive following the occurrence of any of the events listed in Section
      6(f)(ii) below or if the Executive's employment is terminated without cause
      (in
      accordance with Section 6(c) above), in lieu of any payments under Section
      6(d)
      above, the Employer shall pay to the Executive (or the Executive's estate,
      if
      applicable) a lump sum amount equal to 2.99 times the Executive's "base amount"
      within the meaning of Section 280G(b)(3) of the Internal Revenue Code of 1986,
      as amended (the "Code").







(i)
      Change of Control shall mean the occurrence of one or more of the following
      events:





(A)
      any
      "person" (as such term is used in Sections 13(d) and 14(d)(2) of the Securities
      Exchange Act of 1934, as amended (the "Exchange Act")) becomes a "beneficial
      owner" (as such term is defined in Rule 13d-3 promulgated under the Exchange
      Act) (other than the Employer, any trustee or other fiduciary holding securities
      under an employee benefit plan of the Employer, or any corporation owned,
      directly or indirectly, by the stockholders of the Employer, in substantially
      the same proportions as their ownership of stock of Northway), directly or
      indirectly, of securities of Northway, representing fifty percent (50%) or
      more
      of the combined voting power of Northway's then outstanding securities;
      or





(B)
      persons who, as of the Effective Date, constituted Northway's Board of Directors
      (the "Incumbent Board") cease for any reason including, without limitation,
      as a
      result of a tender offer, proxy contest, merger or similar transaction, to
      constitute at least a majority of Northway's Board of Directors, provided that
      any person becoming a director of Northway subsequent to the Effective Date
      whose election was approved by at least a majority of the directors then
      comprising the Incumbent Board shall, for purposes of this Section 6(f), be
      considered a member of the Incumbent Board; or





(C)
      the
      stockholders of Northway approve a merger or consolidation of Northway with
      any
      other corporation or other entity, other than (1) a merger or consolidation
      which would result in the voting securities of Northway outstanding immediately
      prior thereto continuing to represent (either by remaining outstanding or by
      being converted into voting securities of the surviving entity) more than fifty
      percent (50%) of the combined voting power of the voting securities of Northway
      or such surviving entity outstanding immediately after such merger or
      consolidation or (2) a merger or consolidation effected to implement a
      recapitalization of Northway (or similar transaction) in which no "person"
      (as
      hereinabove defined) acquires more than fifty percent (50%) of the combined
      voting power of Northway's then outstanding securities; or





(D)
      the
      stockholders of Northway approve a plan of complete liquidation of Northway
      or
      an agreement for the sale or disposition by Northway of all or substantially
      all
      of Northway's assets.





(ii)
      The
      events referred to in Section 6(f) above shall be as follows:








(A)
      a
      reduction of the Executive's salary other than a reduction that (1) is based
      on
      the Employer's financial performance or (2) is similar to the reduction made
      to
      the salaries provided to all or most other senior executives of the Employer;
      or





(B)
      a
      significant change in the Executive's responsibilities and/or duties which
      constitutes, when compared to the Executive's responsibilities and/or duties
      before the Change of Control, a demotion; or





(C)
      a
      material loss of title or office; or





(D)
      the
      relocation of the offices at which the Executive is principally employed as
      of
      the Change of Control to a location more than fifty (50) miles from such
      offices, which relocation is not approved by the Executive.





(iii)
      The
      Executive shall provide the Employer with reasonable notice and an opportunity
      to cure any of the events listed in Section 6(f)(ii) and shall not be entitled
      to compensation pursuant to this Section 6(f) unless the Employer fails to
      cure
      within a reasonable period; and





(iv)
      It
      is the intention of the Executive and of the Employer that no payments by the
      Employer to or for the benefit of the Executive under this Agreement or any
      other agreement or plan, if any, pursuant to which the Executive is entitled
      to
      receive payments or benefits shall be nondeductible to the Employer by reason
      of
      the operation of Section 280G of the Code relating to parachute payments or
      any
      like statutory or regulatory provision. Accordingly, and notwithstanding any
      other provision of this Agreement or any such agreement or plan, if by reason
      of
      the operation of said Section 280G or any like statutory or regulatory
      provision, any such payments exceed the amount which can be deducted by the
      Employer, such payments shall be reduced to the maximum amount which can be
      deducted by the Employer. To the extent that payments exceeding such maximum
      deductible amount have been made to or for the benefit of the Executive, such
      excess payments shall be refunded to the Employer with interest thereon at
      the
      applicable Federal rate determined under Section 1274(d) of the Code, compounded
      annually, or at such other rate as may be required in order that no such
      payments shall be nondeductible to the Employer by reason of the operation
      of
      said Section 280G or any like statutory or regulatory provision. To the extent
      that there is more than one method of reducing the payments to bring them within
      the limitations of said Section 280G or any like statutory or regulatory
      provision, the Executive shall determine which method shall be followed,
      provided that if the Executive fails to make such determination within
      forty-five (45) days after the Employer has given notice of the need for such
      reduction, the Employer may determine the method of such reduction in its sole
      discretion.





7.
      Confidential Information, Noncompetition and Cooperation.





(a)
      Confidential Information. As used in this Agreement, "Confidential Information"
      means information belonging to the Employer which is of value to the Employer
      in
      the course of conducting its business and the disclosure of which could result
      in a competitive or other disadvantage to the Employer. Confidential Information
      includes, without limitation, financial information, reports, and forecasts;
      inventions, improvements and other intellectual property; trade secrets;
      know-how; designs, processes or formulae; software; market or sales information
      or plans; customer lists; and business plans, prospects and opportunities (such
      as possible acquisitions or dispositions of businesses or facilities) which
      have
      been discussed or considered by the management of the Employer. Confidential
      Information includes information developed by the Executive in the course of
      the
      Executive's employment by the Employer, as well as other information to which
      the Executive may have access in connection with the Executive's employment.
      Confidential Information also includes the confidential information of others
      with which the Employer has a business relationship. Notwithstanding the
      foregoing, Confidential Information does not include information in the public
      domain, unless due to breach of the Executive's duties under Section
      7(b).





(b)
      Confidentiality. The Executive understands and agrees that the Executive's
      employment creates a relationship of confidence and trust between the Executive
      and the Employer with respect to all Confidential Information. At all times,
      both during the Executive's employment with the Employer and after its
      termination, the Executive will keep in confidence and trust all such
      Confidential Information, and will not use or disclose any such Confidential
      Information without the written consent of the Employer, except as may be
      necessary in the ordinary course of performing the Executive's duties to the
      Employer.





(c)
      Documents, Records, etc. All documents, records, data, apparatus, equipment
      and
      other physical property, whether or not pertaining to Confidential Information,
      which are furnished to the Executive by the Employer or are produced by the
      Executive in connection with the Executive's employment will be and remain
      the
      sole property of the Employer. The Executive will return to the Employer all
      such materials and property as and when requested by the Employer. In any event,
      the Executive will return all such materials and property immediately upon
      termination of the Executive's employment for any reason. The Executive will
      not
      retain with the Executive any such material or property or any copies thereof
      after such termination.





(d)
      Noncompetition and Nonsolicitation. During the Term and for one (1) year
      thereafter (or during the Termination Benefits Period, if longer), the Executive
      (i) will not, directly or indirectly, whether as owner, partner, shareholder,
      consultant, agent, employee, co-venturer or otherwise, engage, participate,
      assist or invest in any Competing Business (as hereinafter defined); (ii) will
      refrain from directly or indirectly employing, attempting to employ, recruiting
      or otherwise soliciting, inducing or influencing any person to leave employment
      with the Employer (other than terminations of employment of subordinate
      employees undertaken in the course of the Executive's employment with the
      Employer); and (iii) will refrain from soliciting or encouraging any customer
      or
      supplier to terminate or otherwise modify adversely its business relationship
      with the Employer; provided, however, that the foregoing one-year restriction
      shall not apply in the event the Executive's employment under this Agreement
      is
      terminated pursuant to Section 6(c) hereof. The Executive understands that
      the
      restrictions set forth in this Section 7(d) are intended to protect the
      Employer's interest in its Confidential Information and established employee,
      customer and supplier relationships and goodwill, and agrees that such
      restrictions are reasonable and appropriate for this purpose. For purposes
      of
      this Agreement, the term "Competing Business" shall mean a business (other
      than
      Vaillancourt & Woodward, Inc.) conducted anywhere in the State of New
      Hampshire which is competitive with any business which the Employer or any
      of
      its affiliates conducts or proposes to conduct at any time during the employment
      of the Executive. Notwithstanding the foregoing, the Executive may own up to
      one
      percent (1%) of the outstanding stock of a publicly held corporation which
      constitutes or is affiliated with a Competing Business.





(e)
      Third-Party Agreements and Rights. The Executive hereby confirms that the
      Executive is not bound by the terms of any agreement with any previous employer
      or other party which restricts in any way the Executive's use or disclosure
      of
      information or the Executive's engagement in any business. The Executive
      represents to the Employer that the Executive's execution of this Agreement,
      the
      Executive's employment with the Employer and the performance of the Executive's
      proposed duties for the Employer will not violate any obligations the Executive
      may have to any such previous employer or other party. In the Executive's work
      for the Employer, the Executive will not disclose or make use of any information
      in violation of any agreements with or rights of any such previous employer
      or
      other party, and the Executive will not bring to the premises of the Employer
      any copies or other tangible embodiments of non-public information belonging
      to
      or obtained from any such previous employment or other party.





(f)
      Litigation and Regulatory Cooperation. During and after the Executive's
      employment, the Executive shall cooperate fully with the Employer in the defense
      or prosecution of any claims or actions now in existence or which may be brought
      in the future against or on behalf of the Employer which relate to events or
      occurrences that transpired while the Executive was employed by the Employer.
      The Executive's full cooperation in connection with such claims or actions
      shall
      include, but not be limited to, being available to meet with counsel to prepare
      for discovery or trial and to act as a witness on behalf of the Employer at
      mutually convenient times. During and after the Executive's employment, the
      Executive also shall cooperate fully with the Employer in connection with any
      investigation or review of any federal, state or local regulatory authority
      as
      any such investigation or review relates to events or occurrences that
      transpired while the Executive was employed by the Employer. The Employer shall
      reimburse the Executive for any reasonable out-of-pocket expenses incurred
      in
      connection with the Executive's performance of obligations pursuant to this
      Section 7(f).





(g)
      Injunction. The Executive agrees that it would be difficult to measure any
      damages caused to the Employer which might result from any breach by the
      Executive of the promises set forth in this Section 7, and that in any event
      money damages would be an inadequate remedy for any such breach. Accordingly,
      subject to Section 8 of this Agreement, the Executive agrees that if the
      Executive breaches, or proposes to breach, any portion of this Agreement, the
      Employer shall be entitled, in addition to all other remedies that it may have,
      to an injunction or other appropriate equitable relief to restrain any such
      breach without showing or proving any actual damage to the
      Employer.





8.
      Arbitration of Disputes. Any controversy or claim arising out of or relating
      to
      this Agreement or the breach thereof or otherwise arising out of the Executive's
      employment or the termination of that employment (including, without limitation,
      any claims of unlawful employment discrimination whether based on age or
      otherwise) shall, to the fullest extent permitted by law, be settled by
      arbitration in any forum and form agreed upon by the parties or, in the absence
      of such an agreement, under the auspices of the American Arbitration Association
      ("AAA") in Boston, Massachusetts in accordance with the Employment Dispute
      Resolution Rules of the AAA, including, but not limited to, the rules and
      procedures applicable to the selection of arbitrators, except that the
      arbitrator shall apply the law as established by decisions of the U.S. Supreme
      Court, the Court of Appeals for the First Circuit and the U.S. District Court
      for the District of New Hampshire in deciding the merits of claims and defenses
      under federal law or any state or federal anti-discrimination law, and any
      awards to the Executive for violation of any anti-discrimination law shall
      not
      exceed the maximum award to which the Executive could be entitled under the
      applicable (or most analogous) federal anti-discrimination or civil rights
      laws.
      In the event that any person or entity other than the Executive or the Employer
      may be a party with regard to any such controversy or claim, such controversy
      or
      claim shall be submitted to arbitration subject to such other person or entity's
      agreement. Judgment upon the award rendered by the arbitrator may be entered
      in
      any court having jurisdiction thereof. This Section 8 shall be specifically
      enforceable. Notwithstanding the foregoing, this Section 8 shall not preclude
      either party from pursuing a court action for the sole purpose of obtaining
      a
      temporary restraining order or a preliminary injunction in circumstances in
      which such relief is appropriate; provided that any other relief shall be
      pursued through an arbitration proceeding pursuant to this Section
      8.





9.
      Consent to Jurisdiction. To the extent that any court action is permitted
      consistent with or to enforce Section 8 of this Agreement, the parties hereby
      consent to the jurisdiction of the Superior Court of the State of New Hampshire
      and the United States District Court for the District of New Hampshire.
      Accordingly, with respect to any such court action, the Executive (a) submits
      to
      the personal jurisdiction of such courts; (b) consents to service of process;
      and (c) waives any other requirement (whether imposed by statute, rule of court,
      or otherwise) with respect to personal jurisdiction or service of
      process.





10.
      Integration. This Agreement constitutes the entire agreement between the parties
      with respect to the subject matter hereof and supersedes all prior agreements
      between the parties with respect to any related subject matter.





11.
      Assignment; Successors and Assigns, etc. Neither the Employer nor the Executive
      may make any assignment of this Agreement or any interest herein, by operation
      of law or otherwise, without the prior written consent of the other party;
      provided that the Employer may assign its rights under this Agreement without
      the consent of the Executive in the event that the Employer shall effect a
      reorganization, consolidate with or merge into any other corporation,
      partnership, organization or other entity, or transfer all or substantially
      all
      of its properties or assets to any other corporation, partnership, organization
      or other entity. This Agreement shall inure to the benefit of and be binding
      upon the Employer and the Executive, their respective successors, executors,
      administrators, heirs and permitted assigns.





12.
      Enforceability. If any portion or provision of this Agreement (including,
      without limitation, any portion or provision of any section of this Agreement)
      shall to any extent be declared illegal or unenforceable by a court of competent
      jurisdiction, then the remainder of this Agreement, or the application of such
      portion or provision in circumstances other than those as to which it is so
      declared illegal or unenforceable, shall not be affected thereby, and each
      portion and provision of this Agreement shall be valid and enforceable to the
      fullest extent permitted by law.





13.
      Waiver. No waiver of any provision hereof shall be effective unless made in
      writing and signed by the waiving party. The failure of any party to require
      the
      performance of any term or obligation of this Agreement, or the waiver by any
      party of any breach of this Agreement, shall not prevent any subsequent
      enforcement of such term or obligation or be deemed a waiver of any subsequent
      breach.





14.
      Notices. Any notices, requests, demands and other communications provided for
      by
      this Agreement shall be sufficient if in writing and delivered in person or
      sent
      by a nationally recognized overnight courier service or by registered or
      certified mail, postage prepaid, return receipt requested, to the Executive
      at
      the last address the Executive has filed in writing with the Employer or, in
      the
      case of the Employer, at its main offices, attention of the Board of Directors,
      and shall be effective on the date of delivery in person or by courier or three
      (3) days after the date mailed.





15.
      Amendment. This Agreement may be amended or modified only by a written
      instrument signed by the Executive and by a duly authorized representative
      of
      the Employer.





16.
      Governing Law. This is a New Hampshire contract and shall be construed under
      and
      be governed in all respects by the laws of the State of New Hampshire, without
      giving effect to the conflict of laws principles of such State.





17.
      Counterparts. This Agreement may be executed in any number of counterparts,
      each
      of which when so executed and delivered shall be taken to be an original; but
      such counterparts shall together constitute one and the same
      document.











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      rest
      of this page is left intentionally blank)








IN
      WITNESS WHEREOF, this Agreement has been executed as a sealed instrument by
      the
      Employer, by its duly authorized officer, and by the Executive, as of the
      Effective Date.


NORTHWAY
                  FINANCIAL, INC.Attest:By:
              /s/
              David
                  J. O'Connor
              
              By:
              /s/
              Fletcher
                  W. AdamsName:
              David
                  J. O'Connor
              
              Name:
              Fletcher
                  W. AdamsTitle:
              Executive
                  Vice President
              
              Title:
              Vice
                  Chairmanand
                  Chief Financial OfficerTHE
                  BERLIN CITY BANKAttest:By:
              /s/
              David
                  J. O'Connor
              
              By:
              /s/
              William
                  J. WoodwardName:
              David
                  J. O'Connor
              
              Name:
              William
                  J. WoodwardTitle:
              Executive
                  Vice President
              
              Title:
              President
                  and Chiefand
                  Chief Financial Officer
              
              
              
              Executive
                  OfficerEMPLOYEE/s/
              William
                  J. WoodwardWilliam
                  J. Woodward