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                                                           Exhibit 10.13

                   SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT

         This Agreement, made and entered into as of the 26th day of March, 1998
by and between Abington Savings Bank, a Bank organized and existing under the
laws of The Commonwealth of Massachusetts (the "Bank") and a wholly-owned
subsidiary of Abington Bancorp, Inc. (the "Holding Company"), and James P.
McDonough, a key employee and executive of the Bank (the "Executive").

                                   WITNESSETH.

         WHEREAS, the Executive is a valuable, key employee of the Bank, serving
the Bank as its President and Chief Executive Officer; and

         WHEREAS, because of the Executive's experience, knowledge of the
affairs of the Bank, and reputation and contacts in the banking industry, the
Bank deems the Executive's continued employment with the Bank important for its
future growth; and

         WHEREAS, it is the desire of the Bank and in its best interest that the
Executive's services be retained; and

         WHEREAS, in order to induce the Executive to continue in the employ of
the Bank, the Bank has entered into this Agreement to provide him or his
beneficiaries with certain benefits in accordance with the terms and conditions
hereinafter set forth; and

         WHEREAS, the Bank desires to establish a trust (as defined in Section
1.22, the "Trust") and to contribute to the Trust certain assets that shall be
held therein, subject to the terms of the Trust, until such time as benefits
have been paid to the Executive and his beneficiaries as specified herein;

         NOW, THEREFORE, in consideration of services performed in the past and
to be performed in the future as well as of the mutual promises and covenants
herein contained, it is agreed as follows:

PART 1  DEFINITIONS

         1.1 ACCRUAL-BASED BENEFIT shall mean an amount equal to the aggregate
of all amounts accrued by the Bank or the Holding Company between the date of
this Agreement and the date of determination for the cost of the benefits
payable under this Agreement, multiplied by the Accrued Percentage.

         1.2 ACCRUED PERCENTAGE. Except as provided in the following sentence,
the Accrued Percentage shall be 100%. If the Executive voluntarily resigns from
his position as an officer or employee of the Bank and the Holding Company
without Good Reason (as such term is defined in Section 1.15) and under
circumstances which do not constitute an Early Payment Event (as such term is
defined in Section 1.12), the Accrued Percentage shall be determined by
multiplying (x) twenty percent (20%) times (y) the number of whole and partial
years that have elapsed between the Effective Date and the date on which the
Executive's employment with the Bank and Holding Company terminates. The Accrued
Percentage shall not exceed 100%.

         1.3 ACTUARIAL EQUIVALENT shall mean a benefit of equivalent current
value to the 
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benefit which could otherwise have been provided to the Executive, computed on
the basis of the discount rates, mortality tables and other assumptions then
being used by SBERA in determining the actuarial equivalent of payments being
made by SBERA to its Retirement Plan beneficiaries.

         1.4 BENEFICIARY shall mean the person or persons designated by the
Executive in accordance with Section 3.2 hereof to receive benefits under this
Agreement after the death of the Executive.

         1.5 BENEFIT LIMITATION shall mean the limitation imposed on amounts
payable to certain participants by a retirement plan imposed by Section 415 of
the Code.

         1.6 BOARD or BOARD OF DIRECTORS shall mean the Board of Directors of
the Bank, or, where the context requires, the Board of Directors of the Holding
Company.

         1.7 CALENDAR YEAR. Any reference to "Calendar Year" shall mean a
calendar year from January 1 to December 31.

         1.8 CHANGE IN CONTROL shall have the meaning defined in that certain
Special Termination Agreement restated as of the 31st day of January, 1997 by
and among the Holding Company, the Bank, and the Executive.

         1.9 CODE shall mean the Internal Revenue Code of 1986, as amended.

         1.10 COMPENSATION shall mean all compensation reported on the
Executive's Form W-2 (Wages, tips, other compensation box) for a Calendar Year,
plus amounts contributed by the Executive during said Calendar Year pursuant to
a salary reduction agreement which is not includable in the gross income of the
Executive under Sections 125, 402(e) (3) or 402(h) of the Code.

         1.11 COMPENSATION CAP shall mean the limit imposed by Section
401(a)(17) of the Code on the maximum amount of compensation that may be taken
into account by a retirement plan in determining retirement benefits. Such
Section 401(a)(17) varies in amount for different tax years.

         1.12 EARLY PAYMENT EVENT shall mean the occurrence of any of the
following:

              1.12.1 The Executive terminates his employment with the Bank
         for Good Reason (as such term is defined in Section 1.15); or

             1.12.2 The Bank terminates the Executive's employment with the
         Bank for any reason whatsoever other than for "Cause" (as such term is
         defined in, and in accordance with the procedures set forth in, 
         Section 2.7); or

             1.12.3 The Executive terminates his employment with the Bank
         with the permission of the Bank after the Executive has attained the
         age of 63 but prior to his Normal Retirement Date.

         1.13 EFFECTIVE DATE. The Effective Date of this Agreement shall be
January _, 1998.

         1.14 FINAL AVERAGE COMPENSATION shall mean the average of the
Compensation of the Executive for the three Calendar Years (out of his final
five Calendar Years of employment with the Bank) during which his Compensation
was the highest.


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         1.15 GOOD REASON shall mean:

             1.15.1 The failure of the Board of Directors of the Holding Company
          or the Bank to elect the Executive to the office of President and
          Chief Executive Officer, or to continue the Executive in such offices;
          or

             1.15.2 A reduction in the Executive's annual base salary as in
          effect on the date hereof or as the same may be increased from time to
          time; or

             1.15.3 A material reduction by the Holding Company or the Bank in
          the amount and type of employee benefits being provided to the
          Executive by the Holding Company or the Bank as of the date of this
          Agreement (other than as a result of a company-wide program to
          restructure the nature of the benefits being provided to employees
          generally); or

             1.15.4 A significant diminution in the nature or scope of the
          Executive's responsibilities, authorities, powers, functions or
          duties; or

             1.15.5 A material breach by the Bank of any of the provisions of
          this Agreement which failure or breach shall have continued for thirty
          (30) days after written notice from the Executive to the Holding
          Company or the Bank specifying the nature of such failure or breach;
          or

             1.15.6 The Executive's disability, due to physical or mental
          illness, so as to be unable to perform substantially all of his duties
          and responsibilities as Chief Executive Officer of the Holding Company
          or the Bank; or

             1.15.7 The failure of the Holding Company or the Bank to obtain a
          satisfactory agreement from any successor thereof to assume and agree
          to perform this Agreement.

In addition,"Good Reason" shall include the following events but only if they
shall occur within three years following a Change in Control:

             1.15.8 The failure by the Holding Company or the Bank to continue
          to provide the Executive with benefits substantially similar to those
          available to the Executive under any of the life insurance, medical,
          health and accident, or disability plans or any other material benefit
          plans in which the Executive was participating at the time of the
          Change in Control, or the taking of any action by the Holding Company
          or the Bank which would directly or indirectly materially reduce any
          of such benefits, or the failure by the Holding Company or the Bank to
          provide the Executive with the number of paid vacation days to which
          the Executive is entitled on the basis of years of employment with the
          Holding Company or the Bank in accordance with the normal vacation
          policies in effect at the time of the Change in Control; or

             1.15.9 A reasonable determination by the Executive that, as a
          result of a Change in Control, he is unable to exercise the
          responsibilities, authorities, powers, functions or duties exercised
          by the Executive immediately prior to such Change in Control; or

             1.15.10 A reasonable determination by the Executive that, as a
          result of a Change in Control, his working conditions have
          significantly worsened.

         1.16 INSURANCE POLICY shall mean such insurance policy or policies (if
any) as the


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Bank, in its sole and absolute discretion, may choose to purchase to fund some
or all of the benefits payable hereunder.

         1.17 NORMAL RETIREMENT DATE shall mean the date on which the Executive
attains age sixty-five (65).

         1.18 NORMAL SUPPLEMENTAL RETIREMENT BENEFIT. The Normal Supplemental
Retirement Benefit shall be a single life annuity (payable in equal monthly
installments commencing on the Normal Retirement Date and continuing for the
Executive's life) providing an annual benefit in an amount equal to the
difference between (x) the annual retirement benefit which would have been
payable to the Executive under the Retirement Plan if the Compensation Cap and
the Benefit Limitation had been ignored in calculating such benefit and (y) the
actual annual retirement benefit payable to the Executive under the Retirement
Plan. In each case benefits shall be calculated on the assumption that
Retirement Plan benefits were being paid as a single life annuity. As provided
in Section 3.1, the Executive may elect to receive the Actuarial Equivalent of
such single life annuity paid in a different form, and under certain
circumstances provided in this Agreement, the Executive may elect to accelerate
the date of payment of the benefit payable under this Agreement,

         1.19 RETIREMENT PLAN shall mean the SBERA Pension Plan maintained by
the Bank for the benefit of employees of the Bank and any successor thereto.

         1.20 SBERA shall mean the Savings Banks Employees Retirement
Association.

         1.21 TERMINATING EVENT shall mean any of the following if they occur
within three years after a Change in Control:

             1.21.1 Termination by the Holding Company or the Bank of the
          Executive's employment for any reason whatsoever other than (i) the
          Executive's death or (ii) for "Cause" (as such term is defined in, and
          in accordance with the procedures set forth in, Section 2.7), or

             1.21.2 Resignation of the Executive from the employ of the Bank and
          the Holding company for Good Reason, while the Executive is not
          receiving payments or benefits from the Holding Company or the Bank by
          reason of the Executive's disability.

         1.22 TRUSTEE. Trustee shall mean the trustee to be appointed under that
certain Trust Agreement to be established by the Bank in connection with this
Agreement.

PART 2  BENEFITS

         2.1 TERMINATION OF SERVICE AT NORMAL RETIREMENT DATE. If the Executive
terminates service as an employee with the Bank on or after the Normal
Retirement Date (other than for "Cause", as such term is defined in Section
2.7), he shall receive a Normal Supplemental Retirement Benefit.

         2.2 TERMINATION OF SERVICE BEFORE NORMAL RETIREMENT DATE. If the
Executive's service as an employee of the Bank terminates (other than by reason
of death (which is provided for in Section 2.4), other than for "Cause" (as such
term is defined in Section 2.7), and other than by reason of disability (which
is provided for in Section 2.5)) before his Normal Retirement Date, he shall be
entitled to receive his Accrual-Based Benefit not later than 60 days after
termination of employment.


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         2.3 BENEFITS UPON CHANGE IN CONTROL.

             2.3.1 If within three years following a Change in Control of the
Bank a Terminating Event occurs with respect to the Executive, the Executive
will be entitled to receive his Normal Supplemental Retirement Benefit,
calculated as if the following had occurred: (a) the Executive continued his
employment with the Bank until the Normal Retirement Date, (b) the annual rate
of his base compensation with the Bank in effect at the time of the termination
of employment was increased, on a compound basis, by 6% on each May 1 occurring
after the date of termination of employment and prior to the Normal Retirement
Date, (c) the Executive's annual compensation was paid in twenty-six equal
bi-weekly installments, and (d) the foregoing assumed facts applied in
determining the benefits payable under the Retirement Plan. The Normal
Supplemental Retirement Benefit, as so calculated, will generally be payable at
the Normal Retirement Date, provided that, with the consent of the Board of
Directors, an Actuarial Equivalent of such benefit may be paid (or commenced) to
the Executive or former Executive at an earlier date. In the event that the
Executive requests permission to commence receiving his Benefit before his
Normal Retirement Date and the Board refuses to grant permission for such early
commencement of payments, the Executive may request the Board to reconsider its
decision. If the Board has not agreed to permit such early payment by a date
which is 15 days after the request for reconsideration is made, the Executive
shall have the right to receive upon written application to the Bank the
Actuarial Equivalent of such Normal Supplemental Retirement Benefit, less a
penalty of 7%.

             2.3.2 Upon a Change in Control, the Bank shall, as soon as
possible, but in no event later than 30 days following the Change in Control,
make an irrevocable contribution to the Trust in an amount that is sufficient,
as determined by an actuary appointed by the Trustee, to pay the Executive or
his Beneficiary the full benefits to which he or she would be entitled pursuant
to the terms of this Agreement as of the date on which the Change in Control
occurred assuming that (x) the Accrued Percentage was 100%, (y) a Terminating
Event had occurred with respect to the Executive as of the date of the Change in
Control, and (z) the Board had agreed to pay such benefits to the Executive or
his Beneficiary, on an Actuarial Equivalent basis, as of the date of the Change
in Control. Within the same time period following a Change in Control, the Bank
shall make a further irrevocable contribution to the Trust in an amount
sufficient to pay for the Trustee's fees and for actuarial, accounting, legal
and other professional or administrative services necessary to implement the
terms of this Agreement following a Change in Control. Such amount shall be
determined by the Trustee's estimate of its fees (as provided in the Trust
Agreement) and by estimates obtained by the Trustee from the independent
actuaries, accountants, lawyers and other appropriate professional and
administrative personnel who provided such services to the Trust or the Bank
immediately before the Change in Control.

         2.3.3 If the Executive would be entitled to receive payment of a
benefit under this Section 2.3 and under Section 2.2, the provisions of Section
shall not apply and this Section 2.3 shall be controlling.

         2.4 DEATH BENEFITS.

             2.4.1 NATURE OF DEATH BENEFIT. If (i) the Executive dies prior to
the termination of his employment with the Holding Company and the Bank or (ii)
the Executive's


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employment with the Bank and the Holding Company has been terminated by reason
of his having become disabled and he subsequently dies prior to reaching the age
of 65, then a death benefit shall be payable to the Executive's Beneficiary not
later than sixty days following the death of the Executive. The death benefit
shall be a single lump sum distribution payable not later than 60 days after the
date of his death and shall have two components, as follows. The first component
of the death benefit shall an amount equal to three times the Executive's Final
Average Compensation ("Compensation-Based Benefit"), and the second component
shall be an amount equal to the Accrual-Based Benefit determined as of the date
of the Executive's death.

             2.4.2 SPLIT DOLLAR AGREEMENT. Although the Bank is under no
obligation to fund the benefits payable under this Agreement with any form of
insurance, as of the date of this Agreement the Bank has purchased an Insurance
Policy and has entered into that certain Split Dollar Agreement with the
Executive of even date herewith, providing for the endorsement of the Insurance
Policy so as to provide a death benefit to the Executive's Beneficiary in an
amount equal to the Compensation-Based Benefit. Any amounts received by the
Executive's Beneficiary with respect to the Insurance Policy shall be deducted
from amounts otherwise payable by the Bank to the Executive's Beneficiary
pursuant to this Section 2.4.

         2.4.3 GROSS-UP OF PAYMENTS. In the event that no Insurance Policy is in
place at the time a death benefit is payable to the Executive's Beneficiary (and
as a result, the Compensation-Based Benefit is treated as Income with Respect to
a Decedent pursuant to Section 691 of the Code or by any successor provision, by
reason of such benefit not being considered to be life insurance proceeds), the
Bank shall, in addition to the Compensation-Based Benefit, pay to the
Executive's Beneficiary an amount necessary to ensure that, after the payment of
any federal, state, or local taxes imposed as a result of the treatment of the
Compensation-Based Benefit as Income with Respect to a Decedent, the Executive's
Beneficiary receives and retains, free from liability for any taxes, a net
amount equal to the amount the Executive's Beneficiary would have received and
retained had the Compensation-Based Benefit been considered to be life insurance
proceeds. It is intended that the net after-tax Compensation Based Benefit
received by the Executive's Beneficiary, after taking into account the payments
made pursuant to this Section 2.4.3, shall be equal to the net
Compensation-Based Benefit that the Executive's Beneficiary would have received
if such benefit had not been treated as Income with Respect to a Decedent.

         2.5 DISABILITY. In the event that the Executive shall become "disabled"
(as defined below) while in the employ of the Bank and prior to his Normal
Retirement Date, a disability benefit shall be payable to the Executive. The
amount of the disability benefit shall be the Accrual-Based Benefit, computed at
the time of the Executive's disability with an Accrued Percentage of 100%. The
Executive shall receive such disability benefit in a lump sum when the Executive
becomes disabled. Payments under this Section 2.5 shall be in addition to any
payments otherwise payable to the Executive as a result of disability under any
other plans or agreements in effect from time to time.

             2.5.1 The Executive shall be considered to be "disabled" when he is
no longer capable of performing the material aspects of his employment duties
for the Bank as a result of physical and/or mental impairment. The Executive
shall be considered to be no longer "disabled" at such time as he returns to
work in a position with responsibilities comparable to those inherent in the
position in which he as employed on the date he became "disabled."

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             2.5.2 If the Executive recovers from his disability and returns to
the employ of the Bank, his disability benefit shall terminate and upon his
subsequent termination of service as an employee of the Bank or Holding Company
he shall be entitled to such retirement or termination benefits as he would
otherwise have been entitled to if he had been employed by the Bank or Holding
Company throughout his period of disability. For purposes of the accrual of
benefits under this Agreement, time spent on disability shall be deemed to be
time spent as an employee of the Bank or Holding Company.

         2.5.3 In the event there is disagreement as to whether the provisions
of this Section 2.5 are applicable, the Bank and the Executive (or his personal
representative) each shall select a physician. If the physicians are in
disagreement, they shall select a third physician. A majority opinion of the
three physicians as to disability shall be binding on all the parties hereto.
The parties agree that the Bank will, regardless of the outcome of this
procedure, reimburse the Executive (or his surviving spouse or Beneficiary, as
the case may be) for the reasonable and necessary fees and costs directly
attributable to such procedure.

         2.6 NO BENEFITS UPON DISCHARGE FOR CAUSE. Should the Executive be
discharged for Cause in accordance with the procedures set forth in Section 2.7
at any time (before or after his Normal Retirement Date), all Benefits under
Part 2 of this Agreement shall be forfeited. If a dispute arises as to discharge
for "Cause", such dispute shall be resolved by arbitration as set forth in
Section 3.12 of this Agreement.

         2.7 DISCHARGE FOR CAUSE.

             2.7.1 CAUSE. The term "Cause" shall mean the Executive's deliberate
dishonesty with respect to the Holding Company or the Bank or any subsidiary or
affiliate thereof; conviction of a crime involving moral turpitude; or gross and
willful failure to perform (other than on account of a medically determinable
disability which renders the Executive incapable of performing such services) a
substantial portion of the Executive's duties and responsibilities as an officer
of the Holding Company or the Bank, which failure continues for more than thirty
days after written notice given to the Executive pursuant to a two-thirds vote
of all of the members of the Board then in office, such vote to set forth in
reasonable detail the nature of such failure. Notwithstanding the foregoing, the
Executive shall not be deemed to have been discharged for "Cause" unless and
until there shall have been delivered to him a copy of a certification by the
Clerk of the Holding Company or the Bank that two-thirds of the entire Board of
Directors of the Holding Company or the Bank found in good faith that the
Executive was guilty of conduct which is deemed to be Cause as defined in this
Section 2.7 and specifying the particulars thereof, after reasonable notice to
the Executive setting forth in reasonable detail the nature of such Cause and an
opportunity for him together with his counsel, to be heard before the Board in
accordance with the provisions of Section 2.7.2.

             2.7.2 BOARD TERMINATION PROCEDURE. In each case, in determining
Cause the alleged acts or omissions of the Executive shall be measured against
standards prevailing in the banking industry generally and the ultimate
existence of Cause must be confirmed by not less than two-thirds of the Board at
a meeting prior to any termination therefor; provided, however, that it shall be
the Holding Company's or the Bank's burden to prove the alleged facts and
omissions and the prevailing nature of the standards the Bank shall have alleged
are violated by such acts and/or omissions of the Executive. In the event of
such a confirmation by two-thirds

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         or more of the Board, the Holding Company or the Bank shall notify the
Executive that the Bank intends to terminate the Executive's employment for
Cause under this Section 2.7 (the "Confirmation Notice"). The Confirmation
Notice shall specify the acts or omissions upon the basis of which the Board has
confirmed the existence of Cause and must be delivered to the Executive within
ninety (90) days after a majority of the Board (excluding, if applicable, the
Executive) has actual knowledge of the events giving rise to such purported
termination. If the Executive notifies the Bank in writing (the "Opportunity
Notice") within thirty (30) days after the Executive has received the
Confirmation Notice, the Executive (together with counsel) shall be provided one
opportunity to meet with the Board (or a sufficient quorum thereof) to discuss
such acts or omissions. Such meeting shall take place at the principal offices
of the Holding Company or the Bank or such other location as agreed to by the
Executive and the Bank. During the period commencing on the date the Bank
receives the Opportunity Notice and ending on the date next succeeding the date
on which such meeting between the Board (or a sufficient quorum thereof) and the
Executive is scheduled to occur and not withstanding anything to the contrary in
this Agreement, the Executive shall be suspended from employment with the
Holding Company or the Bank (with pay to the extent not prohibited by applicable
law) and the Board may, during such suspension period, reasonably limit the
Executive's access to the principal offices of the Holding Company or the Bank
or any of its assets. If the Board properly sets the date of such meeting and if
the Board (or a sufficient quorum thereof) attends such meeting and in good
faith does not rescind its confirmation of Cause at such meeting or if the
Executive fails to attend such meeting for any reason, the Executive's
employment by the Holding Company and/or the Bank shall, immediately upon the
closing of such meeting and the delivery to the Executive of the Notice of
Termination, be terminated for Cause. If the Executive does not respond in
writing to the Confirmation Notice in the manner and within the time period
specified in this Section 2.7.2, the Executive's employment with the Holding
Company and/or the Bank shall, on the thirty-first day after the receipt by the
Executive of the Confirmation Notice, be terminated for Cause under this Section
2.7.

         2.7.3 NO LIMITATION ON AUTHORITY OF BOARD. As is provided in Section
3.15, nothing contained in this Agreement (and nothing contained in this Section
2.7 shall in any way limit the right of the Holding Company or the Bank to
discharge the Executive with or without Cause or to limit the access of the
Executive to the premises or assets of the Bank or the Holding Company.

PART 3  ADDITIONAL PROVISIONS

         3.1 ALTERNATIVE FORMS OF BENEFIT PAYMENT. The Executive shall have the
right upon becoming subject to the Plan to elect the form of payment in which
his benefit is to be paid. In any Calendar Year prior to the year in which
amounts become payable hereunder, and at least six months prior to the
Executive's termination of employment, the Executive may change the form of
payment he has elected. In lieu of the annuity form of payment otherwise
provided in this Agreement, upon request the Executive may obtain an Actuarially
Equivalent form of payment; provided that such form is a permitted form of
benefit under the SBERA Pension Plan. Acceptable forms of payment presently
include:

               -    Lump Sum (but only with the permission of the Board)

               -    Life Annuity

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               -    Joint and 50% Survivor Annuity or Joint and 100%
                    Survivor Annuity

         3.2 BENEFICIARY DESIGNATION PROCEDURE. The Executive may designate one
or more Beneficiaries to receive specified percentages of any death benefit
payments to be paid hereunder. The Executive shall designate any such
Beneficiaries in writing and shall submit such writing to the Executive Vice
President or Treasurer of the Bank. Only designated Beneficiaries alive at the
Executive's death shall be entitled to share in the benefit payments. Absent a
contrary specification by the Executive in writing submitted to the Chairman or
Treasurer of the Bank, each Beneficiary alive at the Executive's death (or, in
the case of the Beneficiary's death after the Executive's death, the
Beneficiary's estate) shall share equally in death benefit payments. If no
designated Beneficiary is alive at the Executive's death, his surviving spouse
shall be entitled to all death benefit payments. If the Executive dies leaving
neither a designated Beneficiary nor a surviving spouse, his estate shall be
entitled to any death benefit payments. Except to the extent specifically
provided in this Section 3.2, the Executive may not, without the written consent
of the Bank, assign to any individual, trust or other organization, any right
title or interest in the Insurance Policy nor any rights, options, privileges or
duties created under this Agreement.

         3.3 ASSISTANCE IN PURCHASE OF LIFE INSURANCE. If the Bank elects to
invest in an Insurance Policy, the Executive shall assist the Bank by freely
submitting to a physical exam and supplying such additional information
necessary to obtain such insurance or annuities.

         3.4 ALIENABILITY AND ASSIGNMENT PROHIBITION. Neither the Executive, his
surviving spouse nor any other Beneficiary under this Agreement shall have any
power or right to transfer, assign, anticipate, hypothecate, mortgage, commute,
modify or otherwise encumber in advance any of the benefits payable hereunder
nor shall any of said benefits be subject to seizure for the payment of any
debts, judgments, alimony or separate maintenance owed by the Executive or his
Beneficiary, nor be transferable by operation of law in the event of bankruptcy,
insolvency or otherwise. In the event the Executive or any Beneficiary attempts
assignment, commutation, hypothecation, transfer or disposal of the benefits
hereunder, the Bank's liabilities shall forthwith cease and terminate.

         3.5 BINDING OBLIGATION OF BANK AND ANY SUCCESSOR IN INTEREST. This
Agreement shall bind the Executive and the Bank, their heirs, successors,
personal representatives and assigns. The Bank expressly agrees that it shall
not merge or consolidate into or with another bank or sell substantially all of
its assets to another bank, firm or person until such bank, firm or person
expressly agrees, in writing, to assume and discharge the duties and obligations
of the Bank under this Agreement.

         3.6 AMENDMENT. During the lifetime of the Executive, this Agreement may
be amended only with the mutual written assent of the Executive and the Bank.

         3.7 GENERAL. The benefits provided by the Bank to the Executive
pursuant to this Agreement are in the nature of a fringe benefit and shall in no
event be construed to affect or limit the Executive's current or prospective
salary increases, cash bonuses or profit-sharing distributions or credits or his
right to participate in or be covered by any qualified or non-qualified pension,
profit-sharing, group, bonus or other supplemental compensation or fringe
benefit plan.

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         3.8 HEADINGS. Headings and subheadings in this Agreement are inserted
for reference and convenience only and shall not be deemed a part of this
Agreement.

         3.9 APPLICABLE LAW. This Agreement shall be governed by, and construed
and enforced in accordance with, the substantive laws of The Commonwealth of
Massachusetts without regard to its principles of conflicts of laws.

         3.10 NAMED FIDUCIARY AND PLAN ADMINISTRATOR. The "Named Fiduciary and
Plan Administrator" of this plan shall be Abington Savings Bank until another
administrator is chosen by the Board. As Named Fiduciary and Plan Administrator,
the Bank shall be responsible for the management, control and administration of
the benefits to be provided under this Agreement. The Named Fiduciary may
delegate to others certain aspects of the management and operation
responsibilities of the plan including the employment of advisors and the
delegation of ministerial duties to qualified individuals.

         3.11 CLAIMS PROCEDURE. In the event a dispute arises over benefits
under this Agreement and benefits are not paid to the Executive (or to his
Beneficiary in the case of the Executive's death) and such claimants feel they
are entitled to receive such benefits, then a written claim must be made to the
Plan Administrator named above within sixty (60) days from the date payments are
refused. The Plan Administrator shall review the written claim and if the claim
is denied, in whole or in part, they shall provide in writing within sixty (60)
days of receipt of such claim their specific reasons for such denial, reference
to the provisions of this Agreement upon which the denial is based and any
additional material or information necessary to perfect the claim. Such written
notice shall further indicate the additional steps to be taken by claimants if a
further review of the claim denial is desired. A claim shall be deemed to have
been denied if the Plan Administrator falls to take any action within the
aforesaid ninety-day period.

         If claimants desire a second review they shall notify the Plan
Administrator in writing within ninety (90) days of the first claim denial.
Claimants may review this Agreement or any documents relating thereto and submit
any written issues and comments they may feel appropriate. In its sole
discretion, the Plan Administrator shall then review the second claim and
provide a written decision within sixty (60) days of receipt of such claim. This
decision shall likewise state the specific reasons for the decision and shall
include reference to specific provisions of this Agreement upon which the
decision is based.

         3.12 ARBITRATION. Any controversy or claim arising out of or relating
to the Agreement, or the breach thereof, or any failure to agree where agreement
of the parties is necessary pursuant hereto, including the determination of the
scope of this agreement to arbitrate, shall be resolved by the following
procedures:

             3.12.1 The parties agree to submit any dispute to final and binding
arbitration administered by the American Arbitration Association (the "AAA"),
pursuant to the Commercial Arbitration Rules of the AAA as in effect at the time
of submission. The arbitration shall be held in Boston, Massachusetts before a
single neutral, independent, and impartial arbitrator (the "Arbitrator").

             3.12.2 Unless the parties have agreed upon the selection of the
Arbitrator before then, the AAA shall appoint the Arbitrator within thirty (30)
days after the submission to AAA

                                      -10-
<PAGE>   11
for binding arbitration. The arbitration hearings shall commence within fifteen
(15) days after the selection of the Arbitrator. Each party shall be limited to
two pre-hearing depositions each lasting no longer than two (2) hours. The
parties shall exchange documents to be used at the hearing no later than ten
(10) days prior to the hearing date. Each party shall have no longer than three
(3) hours to present its position, and the entire proceedings before the
Arbitrator shall be on no more than two (2) hearing days within a two week
period. The award shall be made no more than ten (10) days following the close
of the proceeding. The Arbitrator's award shall not include consequential,
exemplary, or punitive damages. The Arbitrator's award shall be a final and
binding determination of the dispute and shall be fully enforceable in any court
of competent jurisdiction. Except in a proceeding to enforce the results of the
arbitration, neither party nor the Arbitrator may disclose the existence,
content, or results of any arbitration hereunder without the prior written
consent of both parties.

         3.13 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties pertaining to its subject matter and supersedes all prior
and contemporaneous agreements, understandings, negotiations, prior draft
agreements, and discussions of the parties, whether oral or written.

         3.14 INTERPRETATION. When a reference is made in this Agreement to
Sections or Exhibits, such reference shall be to a Section of or Exhibit to this
Agreement unless otherwise indicated. Unless the context otherwise requires,
throughout this Agreement, references to Sections refer to Sections of this
Agreement. References to Sections include subsections, which are part of the
related Section (e.g., a section numbered "Section 5.5.1" would be part of
"Section 5.5" and references to "Section 5.5" would also refer to material
contained in the subsection described as "Section 5.5.1"). The recitals hereto
constitute an integral part of this Agreement. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include",
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation". The phrases "the date of this
Agreement", "the date hereof" and terms of similar import, unless the context
otherwise requires, shall be deemed to refer to the date set forth in the
Preamble to this Agreement.

         3.15 EMPLOYMENT. No provision of this Agreement shall be deemed to
restrict or limit any existing employment agreement by and between the Holding
Company or the Bank and the Executive, nor shall any conditions herein create
specific employment rights to the Executive nor limit the right of the Holding
Company or the Bank to discharge the Executive with or without Cause. In a
similar fashion, no provision shall limit the Executive's rights to voluntarily
terminate his employment at any time.

         3.16 COMMUNICATIONS. All notices and other communications hereunder
shall be in writing and shall given by hand, sent by facsimile transmission with
confirmation of receipt requested, sent via a reputable overnight courier
service with confirmation of receipt requested, or mailed by registered or
certified mail (postage prepaid and return receipt requested) to the parties at
the their respective addresses set forth below (or at such other address for a
party as shall be specified by like notice), and shall be deemed given on the
date on which delivered by hand or otherwise on the date of receipt as
confirmed:

                To the Bank or Holding Company:

                                      -11-
<PAGE>   12
                  Abington Savings Bank
                  536 Washington Street
                  Abington, Massachusetts 02351
                  Attention: Treasurer

                  To the Executive:

                  James P. McDonough
                  38 Tindale Way
                  Hanover, Massachusetts 02339

         IN WITNESS WHEREOF, the parties have executed this Agreement as an
instrument under seal, as of the date first written above.

                                          ABINGTON SAVINGS BANK


                                          By:
---------------------------                 ---------------------------------
Witness                                     Title


---------------------------                 ---------------------------------
Witness                                     James P. McDonough

The undersigned hereby guarantees the
obligations of Abington Savings Bank
under the foregoing agreement

ABINGTON BANCORP, INC.

By:
   ----------------------------
Title:
      -------------------------
[Seal]


                                      -12-
<PAGE>   13
                          BENEFICIARY DESIGNATION FORM



PRIMARY DESIGNATION:

         Name                                            Relationship

-----------------------------------          ---------------------------------

-----------------------------------          ---------------------------------

-----------------------------------          ---------------------------------



CONTINGENT DESIGNATION:

-----------------------------------          ---------------------------------

-----------------------------------          ---------------------------------

-----------------------------------          ---------------------------------

FORM OF PAYMENT

               / /    Lump Sum (but only with the permission of the Board)

               / /    Life Annuity

               / /    Joint and 50% Survivor Annuity

               / /    Joint and 100% Survivor Annuity



-----------------------------------          ---------------------------------
James P. McDonough                                          Date


                                      -13-