Document:

Exhibit 10.2

                              FIRST IPSWICH BANCORP

                              2004 Directors' Plan

1.    Purpose and Definitions.

      1.1 The purpose of the First Ipswich Bancorp 2004 Directors' Plan
(hereinafter referred to as the "Plan") is to provide incentives to present and
future directors of First Ipswich Bancorp, a Massachusetts corporation (this
"Corporation") and any of its present and future subsidiaries at least fifty
percent (50%) owned by this Corporation ("Subsidiaries") who are not employees
of the Corporation or of its Subsidiaries (such directors being hereinafter
referred to as "Optionees" and each of them individually as an "Optionee"), in
order that they may provide exceptional services to this Corporation and its
Subsidiaries, and to offer inducements to Optionees to accept and continue
service on its or their boards of directors, as applicable, by offering
Optionees options to purchase shares of this Corporation's common stock.

2.    Administration of Plan.

      2.1 The Plan shall be administered by the Board of Directors of this
Corporation (the "Board of Directors") which shall: (1) determine which
Optionees shall be granted options to purchase shares of this Corporation's
Common Stock ($1.00 par value) ("Stock") pursuant to the Plan (which options
shall hereinafter be referred to as "Options," or in the singular as an
"Option"); (2) determine the time or times when Options shall be granted and the
number of shares of Stock to be subject to each Option; (3) determine the option
price at which the shares of Stock subject to each Option may be purchased
pursuant to the Plan and the forms of the instruments evidencing any Options
granted under the Plan or any other instrument to be used in connection with the
Plan; (4) adopt, amend and rescind, in its discretion, rules and regulations for
the administration of the Plan; (5) interpret the Plan and decide all questions
and settle all controversies and disputes which may arise in connection with the
Plan, which decisions and interpretations shall be binding upon all persons; and
(6) exercise such other powers as may be necessary or desirable to implement the
provisions of this Plan.
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      2.2 The grant of an Option to an Optionee shall not be affected or
invalidated by reason of the fact that such director voted to approve the grant
of such Option.

      2.3 No member of the Board of Directors shall be liable for any action
taken or determination made in good faith and in a manner reasonably believed to
be in the best interests of this Corporation with respect to the Plan or any
Option granted pursuant thereto. The Board of Directors shall indemnify any
person against expenses reasonably incurred or the amount of any damages, fine,
or settlement assessed against or agreed to by such person, in connection with
any action, suit or proceeding in which such person may be involved in
connection with any Option or this Plan to the fullest extent that the Board of
Directors may indemnify such person under the law or By-laws of this
Corporation.

3.    Authority to Grant Options.

      3.1 Subject to the terms and conditions of this Plan, the Board of
Directors may from time to time grant to such Optionees as it may determine
Options upon such terms and conditions as it may deem appropriate, subject to
applicable provisions of this Plan. The Board of Directors may rely upon the
advice any person or persons as they determine appropriate in making
determinations to award Options hereunder.

      3.2 The Board of Directors may authorize the grant of Options to Optionees
by action taken with or without a meeting. The effective date of the grant of an
Option pursuant hereto shall be the date on which the Board of Directors
determines the fair market value of the Stock and grants the Option.

      3.3 The number of shares of Stock subject to an Option shall in each case
be determined by the Board of Directors, subject to the applicable provisions of
this Plan. More than one Option may be granted to the same Optionee.

      3.4 Nothing contained in this Plan or in any resolution adopted by the
Board of Directors or the shareholders of this Corporation shall constitute the
grant of an Option hereunder, and no Optionee shall be entitled to the grant of
an Option unless action granting an Option to such Optionee shall have been
taken by the Board of Directors and unless the recipient of an Option shall have
executed an agreement in

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form and substance satisfactory to the Board of Directors containing terms,
restrictions and conditions imposed upon the exercise of the Option and the
transfer of any Stock pursuant thereto ("Stock Option Agreement").

      3.5 Any purported disposition of shares of Stock acquired pursuant to an
Option which shall be in contravention of the terms, restrictions and conditions
contained in the Stock Option Agreement executed in connection with such Option
shall be ineffective, and such disposition shall not be registered upon the
stock transfer books of this Corporation.

4.    Stock Subject to the Plan

      4.1 Stock to be issued upon the exercise of an Option shall be made
available, in the discretion of the Board of Directors, from authorized but
unissued shares of Stock or from shares of Stock held in the treasury of this
Corporation, however acquired.

      4.2 The aggregate number of shares of Stock for which Options may be
granted under the Plan shall be 20,000. If an Option shall expire, terminate, or
be canceled or surrendered in whole or in part prior to the exercise thereof,
the shares of Stock not acquired under such Option shall revert to the Plan and
again shall become available for issuance under the Plan.

      4.3 Appropriate adjustments in the number of shares of Stock subject to
Options previously issued hereunder and in the number of shares of Stock for
which Options have not yet been granted under this Plan shall be made by the
Board of Directors if at any time after the effective date of this Plan this
Corporation shall increase or decrease the number of outstanding shares of
Stock, whether by stock split, combination, stock dividend or reclassification,
or merger, consolidation, recapitalization, or reorganization.

      4.4 No provision of this Plan, nor any Option granted pursuant hereto or
Stock Option Agreement entered into in connection therewith shall confer upon
any Optionee or any other person any preemptive right to acquire any stock of
this Corporation.

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5.    Eligibility.

      5.1 The Board of Directors may grant Options pursuant hereto to such
Optionees as it may designate from time to time pursuant to Section 3.1 hereof.

      5.2 If an Optionee or former Optionee eligible to exercise an Option
granted pursuant to this Plan dies prior to such exercise, such Option may be
exercised to the extent permitted herein by his estate or a person who acquires
the right to exercise such Option by bequest or inheritance.

      5.3 No Option granted pursuant to this Plan may be transferred by the
holder thereof other than by will or the laws of descent and distribution of the
state in which such holder is domiciled at the time of his death.

6.    Terms of Options.

      6.1 The price at which shares of Stock may be purchased pursuant to an
Option shall be the fair market value of the Stock on the date of grant of such
Option. The fair market value of any stock shall be determined by the Board of
Directors in good faith.

      6.2 Each Option granted under this Plan shall expire, and may not be
exercised to any extent, upon the earliest to occur of the following:

            (a) Each Option shall expire ten years after the date of grant of
such Option, or on such date prior thereto as may be fixed by the Board of
Directors.

            (b) Each Option shall expire at the time after termination of the
Optionee's service with this Corporation or any of its Subsidiaries (with or
without cause, voluntary or involuntary) for reasons other than death,
retirement or Total and Permanent Disability as may be fixed by the Board of
Directors in the Stock Option Agreement, but in no case later than 3 months
after such termination, during the period after termination but prior to
expiration the Option may be exercised only to the extent that it was
exercisable upon termination. If the Optionee's service with this Corporation or
any of its Subsidiaries terminates for reasons of death, retirement or Total and
Permanent Disability, then the Option shall expire twelve (12) months after such
termination of service, and during that 12-month period the Option may be

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exercised only to the extent it was exercisable upon termination. If an Optionee
whose service terminates for reasons other than death, retirement or Total and
Permanent Disability dies during the period between termination and expiration
described above (which period shall be no longer than 3 months after
termination), such Optionee's Options shall expire one (1) year from the date of
termination of service, during which time they may be exercised to the extent
exercisable on the date of termination. An Employee shall be deemed to have a
"Total and Permanent Disability" if (i) the Employee has been so totally and
permanently disabled by any medically determinable physical or mental impairment
as to be prevented thereby from engaging in any substantial gainful activity,
and (ii) in the opinion of a qualified physician selected by the Corporation,
such disability can be expected to result in death or be expected to last for a
continuous period of not less than 12 months. An Employee shall not be deemed to
have a "Total and Permanent Disability" if the Employee incurred the total and
permanent disability while the Employee was engaged in, or as a result of the
Employee engaging in, the commission of a felony, or if the total and permanent
disability was a result of (i) the Employee's addiction to alcohol or narcotics
or (ii) a self-inflicted injury.

      6.3 If an Optionee's service as a director of the Corporation is
terminated for Cause, all unexercised Options granted to the Optionee (whether
vested or not) shall immediately terminate and be of no further force and
effect. An Optionee's service as a director shall be terminated for Cause only
if (i) the Optionee has been convicted by a court of competent jurisdiction of
any criminal offense involving dishonesty or breach of trust; (ii) the Optionee
has committed an act of fraud against the Corporation, its Subsidiaries or any
of them; or (iii) the Optionee has engaged in willful misconduct materially
injurious to the Corporation, its Subsidiaries or any of them, monetarily or
otherwise.

7.    Exercise of Options.

      7.1 Each Option granted hereunder shall be exercisable in such installment
or installments as may be determined by the Board of Directors. The right to
purchase

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shares shall be cumulative so that when the right to purchase any shares has
vested, such shares or any part thereof may be purchased at any time thereafter
until the expiration or termination of the Option.

      7.2 A person entitled to exercise an Option may, subject to the terms and
conditions of the Stock Option Agreement executed in connection therewith,
exercise such Option from time to time by delivery to this Corporation at its
principal office of written notice of his or her intention to exercise such
Option setting forth the number of shares with respect to which the Option is to
be exercised and accompanied by (1) payment in full of the purchase price of the
shares to be purchased, (2) payment in full of all local, state or federal taxes
due on account of the exercise of such Option, and (3) such other documents and
materials as may be required by this Corporation under the terms of this Plan,
the Stock Option Agreement, or otherwise. As promptly as practicable thereafter,
this Corporation shall deliver to the purchaser certificates for the number of
shares purchased. The exercise price of an Option shall be payable either (i) in
United States dollars in cash or by check, bank draft or money order payable to
the order of the Corporation, (ii) through the delivery of shares of Stock owned
by the Optionee with a fair market value equal to the option price, or (iii) by
a combination of (i) and (ii). Fair market value of Stock so delivered shall be
determined on the date of exercise. Unless the Board of Directors otherwise
determines, an Optionee may engage in successive exchange (or series of
exchanges) in which Stock such Optionee is entitled to receive upon exercise of
an Option may be simultaneously utilized as payment for the exercise of an
additional Option or Options. To the extent permitted by applicable law, the
Board of Directors may permit payment of the Option exercise price through
arrangements with a brokerage firm under which such firm, on behalf of the
Optionee, will pay the exercise price to the Corporation and the Corporation
shall promptly deliver to such firm the number of shares of Stock subject to the
Option so that the firm may sell such shares, or a portion thereof, for the
account of the Optionee. In addition, the Board of Directors may permit payment
of the Option exercise price by delivery of an unconditional and irrevocable
undertaking by a broker to deliver promptly to the

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Corporation sufficient funds to pay the exercise price as soon as the shares
subject to the Option, or a portion thereof, are sold on behalf of the Optionee.

      7.3 The date of actual receipt by this Corporation of notice of intention
to exercise an Option shall be deemed the date of exercise of the Option with
respect to the shares then purchased. Delivery of shares purchased shall be
deemed effective when a stock transfer agent shall have deposited certificates
therefor with the United States mail for delivery to the purchaser at the
address specified in the notice of exercise provided to this Corporation.

      7.4 During the life of a holder of an Option issued pursuant to this Plan,
such Option may only be exercised only by the Optionee, or, if legally
incapacitated, his/her personal representative. The Optionee shall not sell,
assign, transfer, pledge, hypothecate, mortgage, encumber or dispose of an
Option, except to this Corporation. Notwithstanding the foregoing, the Optionee
may transfer any of his/her Options (i) by way of gift to any member of his/her
family or to any trust for the benefit of any such family member or the
Optionee; provided, however, that any such transferee shall agree in writing
with this Corporation, as a condition precedent to such transfer, to be bound by
all of the provisions of this Plan to the same extent as if such transferee were
the Optionee, or (ii) by will or the laws of descent and distribution, in which
event each such transferee shall be bound by all of the provisions of this Plan
to the same extent as if such transferee were the Optionee. As used herein, the
word 'family' shall include any spouse, lineal ancestor or descendant, brother
or sister.

      7.5 No person, estate or other entity shall have any of the rights of a
shareholder of this Corporation with respect to shares subject to an Option
until a certificate or certificates for such shares shall have been delivered by
this Corporation to such person or entity. Upon delivery of such a certificate
to the purchaser thereof for the number of shares of Stock purchased, the owner
thereof shall have all the rights of a shareholder of such shares of Stock,
including the right to vote the same and receive dividends thereon, subject,
however, to the terms, conditions and restrictions contained

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in this Plan and in the Stock Option Agreement executed in connection with the
Option exercised with respect to such shares.

8.    Miscellaneous.

      8.1 The grant of an Option pursuant hereto to an employee of this
Corporation or any Subsidiary shall not confer upon such Optionee a right to
continued employment, nor shall it limit the right of this Corporation or any
Subsidiary to terminate the employment of any such Optionee.

      8.2 The Board of Directors may modify, amend or terminate this Plan or any
provision thereof at any time and from time to time. No amendment to this Plan
shall alter or impair any Option previously granted pursuant hereto without the
consent of the holder thereof.

      8.3 The effective date of this Plan shall be the date of adoption by the
Board of Directors. No Option may be granted pursuant hereto subsequent to the
date which is ten (10) years after the date on which the Plan shall be adopted
by the Board of Directors.

      8.4 This Plan, and all rights and obligations hereunder, including matters
of construction, validity and performance, shall be governed by the laws of the
Commonwealth of Massachusetts.

      8.5 Notice to this Corporation pursuant to Sections 7.2 or 8.5 hereof or
for any other purpose may be given by delivery in hand or first class mail,
postage prepaid, and addressed as follows:

            First Ipswich Bancorp
            31 Market Street
            Ipswich, MA 01938
            Attention: President

      Notice to an Optionee to whom an Option shall be granted hereunder may be
given by delivery in hand or first class mail, postage prepaid, to the address
listed by such Optionee in the Stock Option Agreement executed by such Optionee.

                                        8Exhibit 10.3

                              EMPLOYMENT AGREEMENT

      AGREEMENT made and entered into as of this ________ day of __________,
2004 by and between First Ipswich Bancorp, a Massachusetts corporation having
its principal place of business in Ipswich, Massachusetts ("Company"), and
Donald P. Gill of Ipswich, Massachusetts (the "Executive").

                                WITNESSETH THAT:

      WHEREAS, the Executive is currently employed by the Company and has been
employed by the Company since _____________; and

      WHEREAS, the Executive is currently, as has been for approximately
_________ years, employed as president by The First National Bank of Ipswich, a
wholly-owned subsidiary of the Company (the "Bank");

      WHEREAS, the services of the Executive, the Executive's experience and
knowledge of the affairs of the Bank and the Company and the Executive's
reputation and contacts in the banking industry are valuable to the Company and
its subsidiaries; and

      WHEREAS the Company desires to employ the Executive in an executive
capacity in the conduct of its business; and

      WHEREAS the Executive desires to be so employed;

      NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

      1. Term. The period of employment of the Executive under this Agreement
shall be deemed to commence as of the date first above written and shall
continue in effect through March 31, 2007; provided, however that commencing on
March 31, 2005 and on each March 31 thereafter the term of this Agreement shall
automatically be extended for one additional year unless during the 90 day
period preceding such March 31, either party hereto notifies the other by
written notice of his or its intent not to extend the same. Notwithstanding the
foregoing provisions of this Section 1, this Agreement shall terminate in any
event upon the Executive's attainment of age sixty-five (65) or, if earlier, the
normal retirement age provided in the Bank's qualified retirement plan, and the
Executive may resign from the Company at any time upon ninety (90) days prior
written notice to the Company. In addition to the foregoing, the term of this
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agreement may be extended as provided in the Severance Agreement between the
Executive and the Company of even date.

      2. Capacity.

            (a) At all times during the term hereof, the Company shall employ
the Executive as its President and Chief Executive Officer. In such capacity,
the Executive shall be assigned only such duties and tasks as are appropriate
for a person in the position of President and Chief Executive Officer, and he
shall be subject to the supervision of the Board of Directors of the Company.
The Company shall employ the Executive on full-time basis, and (subject to the
last sentence of this paragraph) the Executive shall devote his full time and
professional efforts to the performance of his duties as President of the
Company and any office he may hold in each of its subsidiaries. It is the
intention of the Company and the Executive that the Executive shall have full
discretionary authority to control the day to day operations of the Company and
each subsidiary of the Company and to incur such obligations on behalf of such
entities as may be required in the ordinary course of their business. The
Company encourages participation by the Executive on community boards and
committees and in activities generally considered to be in the public interest,
but the Company shall have the right to approve the Executive's participation on
such other boards and committees as may conflict with the Company's own business
or demands upon the Executive's time.

            (b) During the period of his employment by the Company the Executive
agrees to serve as President and Chief Executive Officer of the Bank without
additional compensation, except for reimbursement for all reasonable
out-of-pocket expenses.

            (c) The Company agrees to propose to its shareholders at each Annual
Meeting of Shareholders during the term hereof for which he is otherwise
eligible, the reelection of the Executive as a Director of the Company, to vote
for the reelection of the Executive as a Director of the Bank and to cause
Executive to be employed as the President and Chief Executive Officer of the
Company and the Bank.

      3. Compensation and Benefits.

            (a) Base Compensation. With respect to the period beginning on the
date hereof and ending on December 31, 2004 and each twelve (12) month period
beginning on January 1 thereafter during the term hereof, the Company shall pay
to the Executive in equal weekly installments a base annual salary (prorated for
the period from the date hereof to December 31, 2004) in

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the amount of Two Hundred Twenty-Five Thousand ($225,000) Dollars. Each January
1 the base annual salary of the Executive shall be increased by an amount not
less than 4% of the previous calendar year's base annual salary, whereupon such
increased amount shall thereafter constitute the Executive's base annual salary.
It is the intention of the Company to compensate the Executive at a level at
least comparable to the compensation of persons employed in the position of
President and Chief Executive Officer of companies engaged in New England in
activities substantially similar to those of the Company and having
approximately the same combined gross assets as the Company and its
subsidiaries.

            (b) Fringe Benefits. At all times during the term of this Agreement,
the Company shall provide or cause to be provided to the Executive the fringe
benefits set forth on Exhibit A to this Agreement, together with such other
benefits as may from time to time be provided generally for executive officers
of the Company or the Bank. The Executive shall maintain adequate records of all
reimbursable expenses necessary to satisfy reporting requirements of the
Internal Revenue Code and applicable Treasury regulations.

      4. Non-Competition. At all times during the term of this Agreement in
which the Executive is employed by the Company and for a period thereafter of
one (1) year (the "Non-Competition Term"), the Executive shall not, directly or
indirectly, as an Executive of any person or entity (whether or not engaged in
business for profit), individual proprietor, partner, stockholder, director,
officer, joint venturer, investor, lender or in any other capacity whatever
(otherwise than as holder of less than ten (10) percent of any securities
publicly traded in the market) compete with the Company and any subsidiary or
affiliate of the Company in any city or town in which the Company or such
subsidiary or affiliate operates at any time during the term of this Agreement,
and any contiguous city or town.

      5. No Solicitation of Executives. At all times during the Non-Compete Term
(as defined in Section 4 hereof), the Executive shall not, directly or
indirectly, employ, attempt to employ, recruit or otherwise solicit, induce or
influence to leave his employment any Executive of the Company or its
subsidiaries.

      6. No Disclosure of Information. The Executive shall not at any time
divulge, use, furnish, disclose or make accessible to anyone other than the
Company or any of its subsidiaries any knowledge of information with respect to
confidential or secret data, procedures or techniques of the Company or any of
its subsidiaries, provided, however, that nothing in this Section 6 shall

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prevent the disclosure by the Executive of any such information which at any
time comes in to the public domain other than as a result of the violation of
the terms of this Section 6 by the Executive or which is otherwise lawfully
acquired by the Executive.

      7. Termination of Employment. The employment of the Executive shall
terminate on the earliest to occur of the following dates:

            (a) The expiration of the term hereof, as from time to time
extended;

            (b) The Executive's resignation from the Company or the death or
disability of the Executive (the Executive being deemed to be disabled if he has
been unable for one hundred eighty (180) consecutive days to render services
required to be rendered by him during the term hereof);

            (c) At the election of the Company, for Cause, acting through its
Board of Directors, as hereinafter defined, after ten (10) business days' prior
written notice of the basis therefor to the Executive if during such period the
Executive shall not have cured the basis therefor. The Company shall give the
Executive written notice of the meeting at which his termination will be
considered, and the right to appear at such meeting, with his advisers. For
purposes of this Agreement, the Company shall be deemed to have "Cause" to
terminate the employment of the Executive under this Agreement only if:

                  (i)   The Executive is convicted by a court of competent
                        jurisdiction of any criminal offense involving
                        dishonesty or breach of trust;

                  (ii)  The Executive shall commit an act of fraud materially
                        evidencing bad faith toward the Company or any of its
                        subsidiaries, or shall engage in willful misconduct
                        which is demonstrably and materially injurious to the
                        Company, or any of its subsidiaries, monetarily or
                        otherwise;

                  (iii) The Executive willfully and continuously fails to
                        substantially perform the duties reasonably assigned to
                        him by the Board of Directors of the Company (other than
                        any such failure resulting from the Executive's
                        incapacity due to physical or mental illness) after a
                        demand for substantial performance is delivered to
                        Executive by the Board of Directors of the Company which
                        specifically identifies the manner

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                        in which the board believes that Executive has not
                        substantially performed such duties.

      For purposes of this Section 7, no failure or action shall be considered
"willful" unless done, or omitted to be done, by Executive not in good faith and
without reasonable belief that the action or omission was in the best interest
of the Company.

      8. Payments Upon Termination of Employment.

            (a) Payments Upon Death. If at any time while he is employed
hereunder the Executive shall die, in addition to all other benefits to which he
or his personal representatives may be entitled, the Company shall pay to his
designated beneficiary or, if no such beneficiary exists, to his estate, for a
period of three (3) months following the Executive's death, such amounts of base
annual salary as the Executive would have been entitled to receive during said
period (and at the times he would have been entitled to receive them) had he
remained alive.

            (b) Payments Upon Disability. If at any time during the term of this
Agreement, in the opinion of a physician mutually agreeable to the Company and
the Executive, the Executive shall be determined to be unable to render services
hereunder due to physical or mental illness or accident, in addition to all
other benefits to which he or his personal representatives may be entitled, the
Executive shall be entitled to receive all benefits payable to him under the
Bank's long-term disability income plan. Upon termination due to disability as
provided in Section 7(b) hereof, Executive shall be entitled to benefits under
the Company's policy of disability insurance until Executive attains age 65 or,
if earlier, until he is no longer disabled, which benefits shall not be less
favorable then the benefits available under the policy in effect on the date of
this Agreement or the Company shall make up any shortfall. Executive shall also
be entitled to receive the health insurance benefits described on Exhibit A
during the period he is receiving disability payments.

            (c) Payments Upon Expiration of Term Without Renewal. In the event
that the term of this Agreement shall expire without renewal, the Executive
shall be entitled to receive compensation through the date of expiration and
shall be entitled to purchase at Bank's book value any Bank-owned automobile
then being used by him.

            (d) Payments Upon Termination for Cause. In the event that Executive
is terminated for Cause (as defined herein), the Executive shall be entitled to
receive compensation through the date of termination.

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            (e) Payment Upon Other Involuntary Termination or Voluntary
Termination for Good Reason. If at any time during the term of this Agreement
the employment of the Executive is terminated involuntarily for any reason
without Cause, as heretofore defined, or voluntarily for Good Reason, as defined
below, then in such case:

                  (i)   Within five days after such termination, the Company
                        shall pay to the Executive (or to his personal
                        representative in case of death), in addition to all
                        accrued and unpaid compensation through the date of such
                        termination, a lump sum amount equal to base annual
                        salary as in effect as of the date of such termination
                        for a period equal to the longer of the remaining term
                        of this Agreement or 12 months.

                  (ii)  The Company shall maintain or cause to be maintained in
                        effect for the Executive for the period following such
                        termination provided in Section 8(e)(i), at the
                        Company's sole expense, all group insurance (including
                        life, health, accident and disability insurance) and all
                        other Executive benefit plans, programs or arrangements,
                        other than the Bank's qualified retirement plan, in
                        which the Executive was participating at any time during
                        the twelve (12) months preceding such termination.

                  (iii) The Executive shall be entitled to purchase at Bank's
                        book value any Bank-owned automobile then being used by
                        him.

                  (iv)  The Executive, without further action by the Executive,
                        the Company or the Bank, shall automatically become
                        fully vested in any outstanding options held by him to
                        acquire shares of the Company or any subsidiary of the
                        Company and in all benefits accrued on his behalf under
                        any other benefit programs of the Company or the Bank.

                  (v)   The Executive shall not be required to mitigate the
                        amount of any payment provided for in this Section 8(e)
                        by seeking employment or otherwise.

      In the event that the Executive's participation in any of the foregoing
plans, programs or arrangements (including those contemplated by Subsections

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8(e)(ii) hereof) is barred by law or otherwise, or in the event that any such
plan, program or arrangement is discontinued or the benefits thereunder are
materially reduced during such period, the Company shall provide the Executive
with benefits substantially similar to those to which the Executive was entitled
immediately prior to the date of his termination of employment. Upon expiration
of the period of coverage provided hereunder, the Executive shall be provided
with the opportunity to have assigned to him at no cost and with no
apportionment of prepaid premiums any assignable insurance owned by the Company
or any of its subsidiaries and relating specifically to the Executive.

      For purposes of this Agreement, voluntary termination for "Good Reason"
shall occur when Executive resigns after delivery of a notice of termination to
the Board terminating Executive's employment under this Agreement at any time
not earlier than ninety (90) days after the date of such notice for any of the
following reasons:

                  (i)   Failure to elect or re-elect or appoint or re-appoint
                        Executive to the office of President and Chief Executive
                        Officer of the Bank other than in connection with the
                        death or disability of Executive, or the expiration of
                        the term of this Agreement.

                  (ii)  A material change in the Executive's function, duties or
                        responsibilities, which change would cause Executive's
                        position with the Company to become of less
                        responsibility, importance or scope.

                  (iii) The relocation of the office where the Bank requires
                        Executive to be based to a location more than forty (40)
                        miles from its present headquarters in Ipswich,
                        Massachusetts, except for required travel on the
                        Company's business to an extent substantially consistent
                        with your present business travel obligations;

                  (iv)  material breach of this Agreement by the Company, not
                        cured within 10 days of written notice thereof.

      The notice of termination referred to above shall be delivered by
Executive within a reasonable period following the occurrence of an event
described in clauses (i) through (iv) above, which period shall not exceed four
(4) calendar months after the event or at any time during the continuation of a
continuing breach. Executive's continued employment shall not constitute consent
to, or a

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waiver of rights with respect to, any circumstance constituting Good Reason
hereunder.

      9. Notices. Notices under this Agreement shall be in writing and shall be
mailed by registered or certified mail, effective upon receipt, addressed as
follows:

         (a)            To the Company:
                        First Ipswich Bancorp
                        31 Market Street
                        Ipswich, MA 01938
                        Attn: Chairman

         (b)            To the Executive:
                        Mr. Donald P. Gill
                        7 Beverly Commons, Apt. 3
                        Salem Building
                        Beverly, MA 01915

Either party may by notice in writing change the address to which notices to it
or him are to be addressed hereunder.

      10. Arbitration. Any dispute or controversy arising under or in connection
with this Agreement shall be settled exclusively by arbitration in Boston,
Massachusetts, in accordance with the rules of the American Arbitration
Association then in effect. Notwithstanding the pendency of any such dispute or
controversy, the Company will pay the Executive promptly an amount equal to his
full compensation in effect when the notice giving rise to the dispute was given
(including, but not limited to, base salary) and shall provide or cause to be
provided to the Executive all compensation, benefits and insurance plans in
which he was participating when the notice giving rise to the dispute was given,
until the dispute is finally resolved. Amounts paid under this Section 10 are in
addition to all other amounts due under this Agreement and shall not be offset
against or reduce any other amounts due under this Agreement. Judgment may be
entered on the arbitrator's award in any court having jurisdiction; provided,
however, that the Executive shall be entitled to seek specific performance of
his right to be paid as specified in this Section 10.

      11. Miscellaneous.

               (a) Indemnification. During the period of his employment
hereunder, the Company agrees to indemnify the Executive in his capacity as a
director and officer of the Bank, the Company, and, each subsidiary of either,
all to the maximum extent permitted under the laws of the Commonwealth of

                                        8
<PAGE>

Massachusetts and applicable banking rules and regulations. The provisions of
the Section 11(a) shall survive expiration or termination of this Agreement for
any reason whatsoever.

            (b) Legal Fees. The Company shall pay to the Executive all
reasonable legal fees and expenses incurred by him in contesting or disputing
any termination of this Agreement or in seeking to obtain or enforce any right
or benefit provided by this Agreement, provided that the final resolution of
such matter principally is in Executive's favor.

            (c) Entire Agreement. This Agreement constitutes the entire
Agreement between the parties and may not be changed except by a writing duly
executed and delivered by the Company and the Executive in the same manner as
the Agreement.

            (d) Governing Law. This Agreement is governed by and shall be
construed in accordance with the laws of the Commonwealth of Massachusetts.
Executive agrees that it supersedes in all respects any prior agreement between
the Company or the Bank and the Executive.

            (e) Binding Effect; Non-Assignability. This Agreement shall be
binding upon the Company and inure to the benefit of the Company and its
successors. Neither this Agreement or any rights arising hereunder may be
assigned or pledged by the Executive during his lifetime. This Agreement shall
inure to the benefit of and be enforceable by the Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees.

            (f) Severability. If any portion or provision of this Agreement
shall to any extent be unenforceable as a result of either a declaration by a
court of competent jurisdiction or the operation of applicable laws and
regulations, then the remainder of the Agreement, or the application of such
portion or provisions in circumstances other than those as to which it is
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.

                                        9
<PAGE>

      IN WITNESS WHEREOF, the parties hereto have executed the within instrument
as a sealed document as of the date first above written.

ATTEST                              FIRST IPSWICH BANCORP

                                    By:
-------------------------              -----------------------------------------
Its Clerk                              Its Chairman

                                    --------------------------------------------
                                    Donald P. Gill

                                       10
<PAGE>

                                    EXHIBIT A
                                       to
                              Employment Agreement
                                     between
                              First Ipswich Bancorp
                                       and
                                 Donald P. Gill

      1. Car. The Bank will provide Executive with a new mid-priced, leased car
every three years.

      2. Insurance. In addition to term insurance provided under the Bank's
existing program (currently two time salary), the Bank will reimburse Executive
for his annual cost to maintain his own $280,000 term insurance policy.
Executive shall designate the beneficiary of such insurance.

      3. Benefit Programs. Executive will participate in all benefit programs
made available to senior management of the Bank, including health insurance
payments.

                                       11

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