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   |                              Confidential                             |
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   |                         The Ipswich Savings Bank                      |
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   |                      Annual Incentive Plan Document                   |
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   |                 BOARD OF DIRECTOR APPROVAL-- 08/16/95                 |
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   |                 EXECUTIVE COMMITTEE APPROVAL-- 09/19/95               |
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   |                           September 15, 1995                          |
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   |                               Prepared by                             |
   |                        THE EXECUTIVE STUDIES GROUP                    |
   |             A Division of BEN S. COLE FINANCIAL INCORPORATED          |
   |                    130 High Street Boston, MA 02110                   |
   |                                                                       |
   |              TEL: 617/350-9900               FAX:617/350-9909         |
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<PAGE>
1.    Purpose

      The Ipswich Savings Bank (the "Bank) Annual Incentive Plan (the "Plan") is
      intended to encourage and reward  outstanding  performance  on the part of
      participating executives.

2.    Administration

      The Plan will be  administered by the  Compensation  Committee of the Bank
      (the  "Committee") and the Committee's  interpretation  and application of
      the  program  of the Plan  shall be final and  binding  on all  concerned.
      Applicable variables for the current Plan year are in Appendix A.

3.    Participants

      The  executives  who will be  eligible  to  receive  awards  will be those
      designated  in writing by the Committee (a  "Participant").  The Committee
      may revise such  designations from time to time at the beginning or during
      the Bank's fiscal year.

4.    Award Targets

      Each participant will have an award target (a "Target Award") expressed as
      a percentage  of salary.  Salary for this  purpose will be the  annualized
      base salary in effect on the last day of the Bank's fiscal year.

5.    Award Determination

      Awards earned under the Plan will depend on Bank  performance  compared to
      performance of all publicly held savings banks in  Massachusetts  based on
      annual return on equity ("ROE").

6.    Peer Banks

      Peer banks will be all  Massachusetts  savings bank that are publicly held
      during the whole Bank fiscal year.  If a Peer bank has a fiscal year other
      than a calendar  year,  the results used will be the fiscal year that ends
      closest to the end of the Bank's fiscal year.
<PAGE>
7.    Performance Measure

      The performance measure will be ROE as reported to stockholders using year
      end equity.  For the Bank ROE will be calculated  after  provision for any
      payments under this Plan. Payments due will depend upon the ROE percentile
      position the Bank achieves.

8.    ROE/Target Award Relationship

      The following  schedule will determine the ROE percentile and Target Award
      relationship.
<TABLE>
<CAPTION>
                                               % of Target
               ROE Percentile                  Award Earned

               <S>                                <C>
               Below 50th percentile              0%
               At 50th percentile                 50%
               At 67th percentile                 100%
               At 75th percentile                 125%
               At 90th percentile                 150%
               Above 90th percentile              200%
</TABLE>
      For purposes of calculating the Bank's percentile among peer banks, actual
      ROE rankings for the 50th, 75th and 90th  percentiles  must equal the next
      highest whole number.

      In between these percentiles, the actual Bank ROE percentile ranking would
      be rounded to the nearest full  percentile to interpolate  the % of Target
      Award Earned  percentage  amount to the nearest full percentage point. All
      actual award amounts will be rounded to the nearest $100.

9.    Bank/Individual Award Mix

      Each Award will consist of a Bank portion that will be paid  automatically
      and an  individual  portion  that  will  depend  on  achievement  of other
      objectives. The mix of Bank and individual awards will be 75% Bank and 25%
      individual  for  the  CEO,  and 50%  Bank  and 50%  individual  for  other
      Participants.
<PAGE>
10.   Individual Awards

      Individual awards will be based on achievement of goals established at the
      beginning of the year.  The  Compensation  Committee  will  determine  the
      individual award for the CEO and the CEO will recommend  individual awards
      to the Committee for all other Participants.

      Individual  awards  may vary from zero to the  maximum  determined  by the
      combination   of  %  of  Target   Award   earned  in  Section  9  and  the
      Bank/Individual Award mix in Section 10.

      Regardless  of overall  Bank  results,  up to a minimum of the  individual
      portion  amount at 100% of Target  Award may be paid  based on  individual
      performance assessment.

11.   Payment of Awards

      Payment  of all  awards  for  the  year  will  be  made in cash as soon as
      possible after peer group results are available.  A participant must be an
      employee  of the Bank on the last day of the  fiscal  year to  receive  an
      award payment under the Plan.

12.   Extraordinary Items

      The  Committee  may decide to include or exclude  any profit or loss items
      that are determined to be extraordinary.  Such  determination will be made
      at the time of such event

13.   Amendment

      The Plan will be in effect for fiscal year 1995 and subsequent  years. The
      Committee  may at any  time  amend  or  discontinue  the  plan,  provided,
      however,  that  no  amendment  may  adversely  affect  the  rights  of any
      Participant during a Plan year.

14.   Employment Rights

      The Plan does not  confer  upon any  Participant  any  right to  continued
      employment  nor does it interfere in any way with the right of the Bank to
      terminate the employment of a Participant.

<PAGE>
                                   APPENDIX A

1.    1995 Annual Incentive Plan Participants
<TABLE>
<CAPTION>

                    Participant                       Target Award (% Salary)
                    -----------                       -----------------------

<S>                                                          <C>
                    Chief Executive Of ficer (Grey)          20%
                    Chief Financial Officer (Kenney)         10%
</TABLE>

2.    Peer Group

      The 26  publicly-held  savings banks in Massachusetts as delineated in the
      SNL Securities September 1995 monthly market report.

3.    1995 ROE/Target Award Relationships (Assumes 26 banks.)
<TABLE>
<CAPTION>

                    Bank Ranking     ROE Percentiie        % Target Award Earned
                    ------------     --------------        ---------------------
<S>                  <C>         <C>                                <C>
                     1-13        Below 50th percentile              0 %
                      14          At 50th percentile                50
                      15          At 56th percentile                68
                      16          At 60th percentile                80
                      17          At 65th percentile                95
                      18          At 69th percentile                107
                      19          At 73rd percentile                119
                      20          At 75th percentile                125
                      21          At 81st percentile                135
                      22          At 85th percentile                142
                      23          At 88th percentile                147
                      24          At 90th percentile                150
                     25-26        Over 90th percentile              200
</TABLE>