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                                                                   Exhibit 10.13

                          SPECIAL TERMINATION AGREEMENT


         AGREEMENT made as of the 2nd day of January, 1998, by and among Warren
Bancorp, Inc., a Massachusetts Corporation (the "Company") and its subsidiary,
Warren Five Cents Savings Bank, a Massachusetts savings bank with its main
office in Peabody, Massachusetts (the "Bank") (the Bank and the Company shall be
hereinafter collectively referred to as the "Employers") and Mark J. Terry, an
individual presently employed by the Bank as Senior Vice President (the
"Executive") in consideration of services performed and to be performed in the
future as well as of the mutual promises and covenants herein contained, it is
agreed as follows:

         1.       Purpose. In order to allow the Executive to consider the
prospect of a Change in Control (as defined in Section 2) in an objective manner
and in consideration of the services to be rendered by the Executive to the
Employers and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged by the Employers, the Employers are willing to
provide, subject to the terms of this Agreement, certain severance benefits to
protect the Executive from the consequences of a Terminating Event (as defined
in Section 3) occurring subsequent to a Change in Control.

         2.       Change in Control. A "Change in Control" shall be deemed to
have occurred in either of the following events: (I) if there has occurred a
change in control which the Company would be required to report in response to
Item 6(e) of Schedule 14A promulgated under the Securities Exchange Act of 1934,
as amended (the "1934 Act"), or, if such regulation is no longer in effect, any
regulations promulgated by the Securities and Exchange Commission (or any
successor Act) which are of similar effect; (ii) when any "person" (as such term
is used in Sections 13(d) and 14(d)(2) of the 1934 Act) becomes a "beneficial
owner" (as such term is defined in Rule 13d-3 promulgated under the 1934 Act),
directly or indirectly, of securities of the Company representing twenty-five
percent (25%) or more of the total number of votes that may be cast for the
election of directors of the Company; (iii) the sale, transfer or other
disposition of all or substantially all of the assets of the Company to another
person or entity; (iv) the election of Directors of the Company equal to
one-third or more of the total number of Directors then in office who have not
been nominated by the Company's Board of Directors or a committee thereof; or
(v) the signing of an agreement, contract or other arrangement providing for any
of the transactions described above in this definition of Change in Control;
and, in the case of (I), (ii), (iii), (iv), or (v) above, the Board of Directors
of the Company has not consented to such event by a two-thirds vote of all of
the members of such Board of Directors who were Directors on the date hereof or
on the date of any extension hereof, which vote was adopted either prior to such
event or within ninety (90) days thereafter.

         3.       Terminating Event. A "Terminating Event" shall mean (a)
termination by either or both of the Employers of the employment of the
Executive with either or both of the Employers for any reason other than (i)
death, (ii) disability, (iii) deliberate dishonesty of the Executive with
respect to either of the Employers or any subsidiary or affiliate of either, or
(iv) conviction of the
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Executive of a crime involving moral turpitude, or (b) resignation of the
Executive from the employ of either of the Employers subsequent to the
occurrence of any of the following events:

                  (i)      A significant change in the nature or scope of the
                           Executive's responsibilities, authorities, powers,
                           functions or duties from the responsibilities,
                           authorities, powers, functions or duties exercised by
                           the Executive immediately prior to the Change in
                           Control; or

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

                  (iii)    A decrease in the total annual compensation payable
                           by the Employers to the Executive other than as a
                           result of a decrease in compensation payable to the
                           Executive and to all other executive officers of the
                           Employers on the basis of the Employers' financial
                           performance.

         4.       Severance Payment.

                  Subject to the provisions of Section 5 below, in the event a
Terminating Event occurs within three (3) years after a Change in Control, the
Employers shall pay, in one lump-sum payment on the date of termination, to the
Executive an aggregate amount equal to (x) three times the "base amount" (as
defined in Section 280G(b)(3) of the Internal Revenue Code of 1986, as from
time to time amended (the "Code")) applicable to the Executive, less (y) One
Dollar ($1.00).

         5.       Limitation on Benefits.

                  (a)      It is the intention of the Executive and of the
Employers that no payments by the Employers to or for the benefit of the
Executive under this Agreement shall be non-deductible to the Employers by
reason of the operation of Section 280G of the Code relating to parachute
payments. Accordingly, and notwithstanding any other provision of this
Agreement, if by reason of the operation of said Section 280G any such payments
when combined with any other payments under any other agreement exceed the
amount which can be deducted by the Employers, such payments shall be reduced to
the maximum amount which can be deducted by the Employers. To the extent that
payments exceeding such maximum deductible amount have been made to or for the
benefit of the Executive under this or any other agreement or arrangement
between the Executive and the Company, such excess payments shall be refunded to
the Employers with interest thereon at the applicable Federal Rate determined
under Section 1274(d) of the Code, compounded annually, or at such other rate as
may be required in order that no such payments shall be non-deductible to the
Employers by reason of the operation of said Section 280G. To the extent that
there is more than one method of reducing the payments to bring them within the
limitations of said Section 280G, the Executive shall determine which method
shall be


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followed, provided that if the Executive fails to make such determination within
forty-five days after the Employers have sent him written notice of the need for
such reduction, the Employers may determine the method of such reduction in
their sole discretion.

                  (b)      If any dispute between the Employers and the
Executive as to any of the amounts to be determined under this Section 5, or the
method of calculating such amounts, cannot be resolved by the Employers and the
Executive, either the Employers or the Executive after giving three days written
notice to the other, may refer the dispute to a partner in the Massachusetts
office of a firm of independent certified public accountants selected jointly by
the Employers and the Executive. The determination of such partner as to the
amount to be determined under Section 5(a) and the method of calculating such
amounts shall be final and binding on both the Employers and the Executive. The
Employers shall pay, as they are incurred, the costs of any such determination.

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

         7.       Term. This Agreement shall take effect on the day first above
written, and shall terminate upon the earlier of (a) the termination by the
Employers of the employment of the Executive because of death, deliberate
dishonesty of the Executive with respect to either of the Employers or any
subsidiary or affiliate of either, or conviction of the Executive of a crime
involving moral turpitude, (b) the resignation or termination of the Executive
for any reason prior to a Change in Control, or (c) the resignation of the
Executive after a Change in Control for any reason other than the occurrence of
any of the events enumerated in Section 3(b)(i)-(iii) of this Agreement.

         8.       Withholding. In making any payments under this Agreement the
Employers shall withhold any tax or other amounts required to be withheld by the
Employers under applicable law.

         9.       Arbitration of Disputes. Any controversy or claim arising out
of or relating to this Agreement or the breach thereof shall be settled by
arbitration in accordance with the laws of the Commonwealth of Massachusetts by
three arbitrators, one of whom shall be appointed by the Employers, one by the
Executive and the third by the first two arbitrators. If the first two
arbitrators cannot agree on the appointment of a third arbitrator, then the
third arbitrator shall be appointed by the American Arbitration Association in
the City of Boston. Such arbitration shall be conducted in the Commonwealth of
Massachusetts in accordance with the rules of the American Arbitration
Association, except with respect to the selection of arbitrators which shall be
as provided in this Section 9. Judgment upon the award rendered by the
arbitrators may be entered in any court having jurisdiction thereof. This
arbitration provision shall not be used for matters of the type referred to in
Section 5(b), except to settle the selection of the accounting partner described
in said section in the event that the Employers and the Executive cannot agree
on the selection.


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         10.      Assignment. Neither the Employers nor the Executive may make
any assignment of this Agreement or any interest herein, by operation of law or
otherwise, without the prior written consent of the other party; provided,
however, that the Employers may assign their rights and obligations under this
Agreement without the consent of the Executive in the event either of the
Employers shall hereafter effect a reorganization, consolidate with or merge
into any other person or entity, or transfer all or substantially all of its
properties or assets to any other entity or person. This Agreement shall inure
to the benefit of and be binding upon the Employers and the Executive, their
respective successors, executors, administrators, heirs and permitted assigns.
In the event of the Executive's death prior to the completion by the Employers
of all payments due to the Executive under this Agreement, the Employers shall
continue such payments to the Executive's beneficiary designated in writing to
the Employers prior to the Executive's death (or to the Executive's estate, if
the Executive fails to make such designation).

         11.      Enforceability. If any portion or provision of this Agreement
shall to any extent be declared illegal or unenforceable by a court of competent
jurisdiction, then the remainder of this Agreement, or the application of such
portion or provision in circumstances other than those as to which it is so
declared illegal or unenforceable, shall not be affected thereby, and each
portion and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law; provided, however, that the Employers shall not
be obligated to make any payments under this Agreement in the event that doing
so would violate any law, regulation, or regulatory directive applicable to the
Company or the Bank.

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

         13.      Notices. Any notices, requests, demands and other
communications provided for by this Agreement shall be sufficient if in writing
and delivered in person or sent by registered or certified mail, postage
prepaid, to the Executive at the last address the Executive maintained in the
books and records of the Employers; in the case of the Bank, at its main offices
attention of the Clerk; or in the case of the Company, at its main offices
attention of the Clerk.

         14.      Election of Remedies. An election by the Executive to resign
after a Change in Control under the provisions of this Agreement shall not
constitute a breach by the Executive of any employment agreement between the
Employers and the Executive or a breach of any of the Executive's obligations as
an employee of the Employers and shall not be deemed a voluntary termination of
employment by the Executive for the purpose of interpreting the provisions of
any of the Employers' benefit plans, programs or policies. Nothing in this
Agreement shall be construed to limit the rights of the Executive under any
employment agreement the Executive may then have with the Employers, provided,
however, that if there is a Terminating Event under Section 3 hereof, the
Executive may elect either to receive the severance payment provided under


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Section 4 or such termination benefits as the Executive may have under any such
employment agreement, but may not elect to receive both.

         15.      Amendment. This Agreement may be amended or modified only by a
written instrument signed by the Executive and by duly authorized
representatives of each of the Company and the Bank.

         16.      Allocation of Obligations Between Employers. The obligations
of the Employers under this Agreement are intended to be the joint and several
obligations of the Bank and the Company. The Employers shall, as between
themselves, allocate these obligations in a manner agreed by them.

         17.      Governing Law. This is a Massachusetts contract and shall be
construed under and be governed in all respects by the laws of the Commonwealth
of Massachusetts.

         IN WITNESS WHERETO, this Agreement has been executed as a sealed
instrument by the Company and the Bank, by their duly authorized officers, and
by the Executive, as of the date first above written.


WITNESS:


____________________________________      ___________________________________

[Seal]

ATTEST:                                   WARREN BANCORP, INC.


____________________________________      By:  _____________________________

                                          Title:____________________________

[Seal]


ATTEST:                                   WARREN FIVE CENTS SAVINGS BANK


____________________________________      By: ______________________________

                                          Title:____________________________


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