Exhibit 10.12

                                                                  Execution Copy

                              Amended and Restated
                               Severance Agreement

        This Amended and Restated Agreement (the "Agreement") is entered into by
and between  Thomas R. Girard,  Vice  President  of Mortgage  Banking of Ipswich
Savings  Bank (the  "Executive")  and Ipswich  Savings  Bank (the  "Bank").  The
Agreement was effective as of the 18th day of June, 1997 (the "Effective  Date")
and amended and restated on May 18, 1999.

        WHEREAS,  the Bank has formed Ipswich  Bancshares as its holding company
(the  "Company")  and  is in  the  process  of  completing  a  "Holding  Company
Reorganization;"

        WHEREAS,  the Board of  Directors of the Bank desires to assure that the
Executive, in the Executive's capacity as an executive officer of the Bank, will
consider  the  prospect  of a "Change in Control"  (as  defined in Section  1(a)
below) of the Company or the Bank in an objective manner; and

        WHEREAS, the Executive desires  to commit  himself  to serve the Bank to
the best of his ability;

        NOW, THEREFORE,  in consideration of the foregoing and the agreements of
the parties herein contained, the parties hereto agree as follows:

        1. Consequences of Termination of the Executive's  Employment  Following
Change in Control.  If there is a "Change in Control" (as defined in  subsection
(a) below) during the "Term" (as defined in Section 2 below),  the provisions of
this Section shall apply and shall continue to apply throughout the remainder of
the Term. If, within three months following a "Change in Control" (as defined in
subsection (a) below), the Executive's employment is terminated by the Executive
following a  reduction  of the  Executive's  commission  schedule  (other than a
reduction which is based on the Bank's  financial  performance and is similar to
the  reduction  made to the  compensation  provided to each other officer of the
Bank), the Executive (or the Executive's  estate,  if applicable)  shall receive
such  compensation  as is provided to the Executive  pursuant to subsection  (c)
below.  Similarly,  if the Executive's  employment is terminated without "cause"
(as defined in subsection (b) below) by the Bank within three months following a
"Change in Control" (as defined in subsection (a) below),  the Executive (or the
Executive's  estate,  if  applicable)  shall  receive  such  compensation  as is
provided to the Executive pursuant to subsection (c) below.

            (a) For the purposes of this Section  "Change in Control" shall mean
the occurrence of any one or more of the following events:

                (i) after the Effective Date, any "person" (as such term is used
        in Sections  13(d) and 14(d) of the  Securities  Exchange  Act of 1934),
        other than the  Company or the Bank,  becomes a  "beneficial  owner" (as
        such term is defined in Rule 13d-3 as  promulgated  under the Securities
        Exchange Act of 1934) directly or indirectly of securities  representing
        25% or more of the  total  number  of  votes  that  may be cast  for the
        election of  Directors  of the Company or the Bank and two thirds of the
        Board of  Directors  of the  Company or the Bank (the  "Board")  has not
        consented  to such event prior to its  occurrence  or within  sixty (60)
        days thereafter, provided that if the consent occurs after the event, it
        shall only be valid for the purposes of this paragraph (i) if a majority
        of the  consenting  Board of the  Company  or the Bank is  comprised  of
        Directors  of the Company or the Bank who were  Directors of the Company
        or the Bank immediately prior to the event;

                     (ii) within two years after a merger, consolidation or sale
        of assets involving the Company or the Bank, or a contested  election of
        a Company or a Bank Director,  or any combination of the foregoing,  the
        individuals  who were  Directors of the Company or the Bank  immediately
        prior thereto shall cease to constitute a majority of the Board; or

                     (iii)  within two years  after a tender  offer or  exchange
        offer for voting  securities  of the  Company or the Bank (other than by
        the Company),  the  individuals who were Directors of the Company or the
        Bank  immediately  prior thereto shall cease to constitute a majority of
        the Board.

Under no  circumstances  shall the Holding Company  Reorganization  constitute a
Change in Control.

                (b)  For  purposes  of  this  Section  1,  "cause"   shall  mean
activities  which  have had an  adverse  effect  on the  financial  strength  or
stability  of the Bank;  neglect of duties  for which  employed  (other  than on
account of a medically  determinable  disability  which  renders  the  Executive
incapable of performing such services);  committing fraud,  misappropriation  or
embezzlement in the performance of duties as an employee of the Bank; conviction
of a felony  involving  a crime of moral  turpitude;  or  willfully  engaging in
conduct injurious to the Bank.

                (c) If the Executive  becomes  entitled to receive  compensation
pursuant to this  Section,  he shall  receive a lump-sum  payment  from the Bank
within 30 days of the  termination  of his  employment in an amount equal to the
lesser of (i) one times the  Executive's  compensation  during the  fiscal  year
preceding the date of  termination of employment as reported to the Executive on
Form W-2, or (ii) $150,000.

        2.  Employment  Status.  This  Agreement  is not an  agreement  for  the
employment of the  Executive and shall confer no rights on the Executive  except
as herein expressly provided.

        3. Term and One-Year Extension.  The term of this Agreement shall be one
year  commencing  with the Effective Date hereof (the "Term").  The Term of this
Agreement will, however, be automatically extended for additional periods of one
year  commencing  on the first  anniversary  of the  Effective  Date and on each
subsequent  anniversary  thereafter,  unless either party  notifies the other in
writing  at least  three  months  prior to the date of such  anniversary  of the
Effective Date that the Agreement is not to be extended.

        4.   Exclusivity Covenant; Noncompetition.

        (a) Except with the prior  written  consent of the Board,  the Executive
will not  while in the  employ  of the  Bank,  undertake  or engage in any other
employment occupation or business enterprise.  Further, the Executive agrees not
to acquire,  assume or participate  in,  directly or  indirectly,  any position,
investment or interest,  in the areas where the Bank maintains  banking offices,
adverse or  antagonistic  to the Bank,  its business or prospects,  financial or
otherwise,  or take any  action  towards  any of the  foregoing,  except for any
investment  representing  less than one percent (1%) of the voting shares of any
private or publicly-held corporation.
<PAGE>
        (b) During a period of one year following the date of termination of the
Executive's  employment  with the  Bank for any  reason,  whether  voluntary  or
involuntary,  the Executive will not,  directly or indirectly  whether as owner,
partner, shareholder,  consultant, agent, employee, co-venturer or otherwise, or
through any Person (as  hereafter  defined),  compete in the Bank's  market area
(defined as Essex County,  Massachusetts) with the mortgage banking or any other
business  conducted  by the Bank or any  Subsidiary  during  the  period  of his
employment  hereunder,  nor will he  attempt to hire any  employee  of the Bank,
assist in such  hiring by any  other  Person,  encourage  any such  employee  to
terminate  his or her  relationship  with the Bank or to conduct  with any other
Person any business or activity  which such  customer  conducts or could conduct
with the Bank.

        5.  Assignment.  This  Agreement and the rights and  obligations  of the
parties hereto shall bind and inure to the benefit of each of the parties hereto
and shall also bind and inure to the benefit of any  successor or  successors of
the  Company  or the Bank by  reorganization,  merger or  consolidation  and any
assignee of all or substantially all of its business and properties, but, except
as to any such  successor  or assignee of the Company or the Bank,  neither this
Agreement nor any rights or benefits hereunder may be assigned by the Company or
the Bank or by the Executive.

        6. Withholding. All payments made by the Bank under this Agreement shall
be net of any tax or other  amounts  required  to be  withheld by the Bank under
applicable Federal and state law.

        7. Governing Law. This Agreement shall be construed in accordance  with,
and governed for all purposes by, the laws of the Commonwealth of Massachusetts,
without regard to its principles of conflicts of laws.

        8.  Interpretation.  In case any one or more of the provisions contained
in this  Agreement  shall,  for any reason,  be held to be  invalid,  illegal or
unenforceable in any respect,  such invalidity,  illegality or  unenforceability
shall not affect any other  provisions  of this  Agreement,  but this  Agreement
shall be construed as if such invalid,  illegal or  unenforceable  provision had
never been contained herein.

        9.  Enforcement.  Any  legal  expenses  incurred  by  the  Executive  in
enforcing his rights  hereunder  (regardless  of whether the  provisions of this
Agreement  have  terminated)  shall be paid by the Bank,  provided that both the
Executive prevails on the merits of his claim or claims and the Bank's rights of
appeal  with  respect  to such  claim or  claims  have  been  exhausted  or have
otherwise  expired.  The Bank shall pay such legal  expenses (or  reimburse  the
Executive,  if appropriate)  within thirty (30) days after the later of the date
on which the conditions  specified in the previous sentence are fulfilled or the
date on which the  Executive  submits  evidence  of such legal  expenses  to the
Board.

        10.   Amendment  and  Waiver.   This   Agreement  may  not  be  amended,
supplemented  or waived  except by a writing  signed by the party  against which
such amendment or waiver is to be enforced.  The waiver by any party of a breach
of any  provision of this  Agreement  shall not operate to, or be construed as a
waiver of, any other breach of that  provision  nor as a waiver of any breach of
another provision.
<PAGE>
        11. Binding Effect.  Subject to the provisions of Section 4 hereof, this
Agreement shall be binding on the successors and assigns of the parties hereto.

        12. Notices.  Any notices,  requests,  demands and other  communications
provided for by the Agreement shall be sufficient if in writing and delivered in
person  or sent  by  registered  or  certified  mail,  postage  prepaid,  to the
Executive at the last address the  Executive  has filed in writing with the Bank
or, in the case of the Company or the Bank,  at their main office,  attention of
the President (with a copy to Carol Hempfling  Pratt,  Foley,  Hoag & Eliot, One
Post Office Square, Boston, Massachusetts 02109).

        13.  Counterparts.  This  Agreement  may be  executed  in any  number of
counterparts,  each of which is an original but which shall together  constitute
one and the same instrument.

        IN  WITNESS  WHEREOF,  the  Company,  the  Bank and the  Executive  have
executed this Agreement under seal as of the date first set forth above.

IPSWICH SAVINGS BANK                  EXECUTIVE

By:
------------------------              ---------------------------
David L. Grey, President              Thomas R. Girard

The undersigned hereby guarantees the
obligations of Ipswich Savings Bank under the
foregoing Agreement

IPSWICH BANCSHARES, INC.

By:
------------------------
David L. Grey, President