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                                                                    Exhibit 10.5



                             ABINGTON BANCORP, INC.

                  INCENTIVE AND NONQUALIFIED STOCK OPTION PLAN

















                                                      As amended and restated
                                                      Effective January 31, 1997
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                             ABINGTON BANCORP, INC.

                  Incentive and Nonqualified Stock Option Plan


SECTION 1. PURPOSE

         This Incentive and Nonqualified Stock Option Plan (the "Plan") is
intended as a performance incentive for directors, officers and employees of
Abington Bancorp, Inc.(the "Company") or its Subsidiaries (as hereinafter
defined) and for certain other individuals providing services to the Company or
its Subsidiaries, to enable the persons to whom options are granted (the
"Optionees") to acquire or increase a proprietary interest in the success of the
Company. The Company intends that this purpose will be effected by the granting
of "incentive stock options" ("Incentive Options") as defined in Section 422 of
the Internal Revenue Code of 1954, as amended (the "Code") and nonqualified
stock options ("Nonqualified Options") under the Plan. The term "Subsidiaries"
includes any corporations in which stock possessing 50 percent or more of the
total combined voting power of all classes of stock is owned directly or
indirectly by the Company.

SECTION 2. OPTIONS TO BE GRANTED AND ADMINISTRATION

         2.1 Options granted under the Plan may be either Incentive Options or
Nonqualified Options.

         2.2 The Plan shall be administered by a committee (the "Option
Committee") of not less than three directors appointed by the Board of Directors
of the Company. None of the members of the Option Committee shall be an officer
or other full-time employee of the Company. It is the intention of the Company
that the Plan shall be administered, in accordance with the provisions of
Section 4 hereof, by "disinterested administrators" within the meaning of Rule
16b-3 under the Securities Exchange Act of 1934 (the "1934 Act"). The Committee
so selected shall exercise all powers under the Plan and shall continue in
office until other action is taken by the Board of Directors. Action by the
Option Committee shall require the affirmative vote of a majority of all its
members.

         2.3 Subject to the terms and conditions of the Plan, the Option
Committee shall have the power:

                  (a) To determine from time to time the options to be granted
         to eligible persons under the Plan, to prescribe the terms and
         provisions (which need not be identical) of each option granted under
         the Plan to such persons, and to recommend to the Board of Directors
         for its approval the grant of options;

                  (b) To construe and interpret the Plan and options granted
         thereunder and to


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         establish, amend, and revoke rules and regulations for administration
         of the Plan. In this connection, the Option Committee may correct any
         defect or supply any omission, or reconcile any inconsistency in the
         Plan, or in any option agreement, in the manner and to the extent it
         shall deem necessary or expedient to make the Plan fully effective. All
         decisions and determinations by the Option Committee in the exercise of
         this power shall be final and binding upon the Company and Optionees;
         and

                  (c) Generally, to exercise such powers and to perform such
         acts as are deemed necessary or expedient to promote the best interests
         of the Company with respect to the Plan.

SECTION 3. STOCK

         3.1 The stock subject to the options granted under the Plan shall be
shares of the Company's authorized but unissued common stock, par value $.10 per
share (the "Common Stock"). The total number of shares that may be issued
pursuant to options granted under the Plan shall not exceed an aggregate of
230,000 shares of Common Stock. Such number shall be subject to adjustment as
provided in Section 7 hereof.

         3.2 Whenever any outstanding option under the Plan expires, is
cancelled or is otherwise terminated (other than by exercise), the shares of
Common Stock allocable to the unexercised portion of such option may again be
the subject of options under the Plan.

SECTION 4. ELIGIBILITY

         4.1 Incentive Options may be granted only to officers and other
employees of the Company or its Subsidiaries, including members of the Board of
Directors who are also employees of the Company or its Subsidiaries.
Nonqualified Options may be granted to officers or other employees of the
Company or its Subsidiaries, to members of the Board of Directors (regardless of
whether they are also employees) and to certain other individuals providing
services to the Company or its Subsidiaries.

         4.2 No Incentive Option shall be granted to an individual who, at the
time the Incentive Option is granted, owns (including ownership attributed
pursuant to Section 425(d) of the Code) more than ten percent (l0%) of the total
combined voting power of all classes of stock of the Company or any parent or
subsidiary of the Company (a "greater-than-ten-percent stockholder"), unless
such Incentive Option provides that (i) the purchase price per share shall not
be less than one hundred ten percent (ll0%) of the fair market value of the
Common Stock at the time such Incentive Option is granted, and (ii) that such
Incentive Option shall not be exercisable to any extent after the expiration of
five (5) years from the date it is granted.

         4.3 The aggregate fair market value (determined at the time the
Incentive Option is


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granted) of the stock with respect to which Incentive Options are exercisable
for the first time by any person during any calendar year under the Plan and
under any other option plan of the Company (or a parent or subsidiary as defined
in Section 425 of the Code) shall not exceed $100,000. Any option granted in
excess of the foregoing limitations shall be clearly and specifically designated
as not being an Incentive Option.

SECTION 5. TERMS OF THE OPTION AGREEMENTS

         Each option agreement shall contain such provisions as the Option
Committee shall from time to time deem appropriate. Option agreements need not
be identical, but each option agreement by appropriate language shall include
the substance of all of the following provisions:

         5.1 Expiration. Notwithstanding any other provision of the Plan or of
any option agreement, each option shall expire on the date specified in the
option agreement, which date shall not be later than the tenth anniversary of
the date on which the option was granted (fifth anniversary in the case of a
greater-than-ten-percent stockholder).

         5.2 Exercise.

                  5.2.1 Each option shall be exercisable in full or in
installments (which need not be equal) and at such times as designated by the
Option Committee. To the extent not exercised, installments shall accumulate and
be exercisable, in whole or in part, at any time after becoming exercisable, but
not later than the date the option expires.

                  5.2.2 In the event of a Change in Control of the Company (as
defined in Section 5.6 below), all options outstanding as of the date of such
Change in Control shall become immediately exercisable.

         5.3 Purchase Price. The purchase price per share of the Common Stock
under each option shall be not less than the fair market value of the Common
Stock on the date the option is granted (110% of the fair market value in the
case of a greater-than-ten-percent stockholder). For the purpose of the Plan the
fair market value of the Common Stock shall be determined by the Option
Committee.

         5.4 Transferability of Options. Options shall not be transferable by
the Optionee otherwise than by will or under the laws of descent and
distribution, and shall be exercisable, during his lifetime, only by him.

         5.5 Rights of Optionees. No Optionee shall be deemed for any purpose to
be the owner of any shares of Common Stock subject to any option unless and
until (i) the option shall have been exercised pursuant to the terms thereof,
(ii) the Company shall have issued and delivered the shares of the Optionee, and
(iii) the Optionee's name shall have been entered as a



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stockholder of record on the books of the Company. Thereupon, the Optionee shall
have full voting, dividend and other ownership rights with respect to such
shares of Common Stock.

         5.6 Change in Control. For purposes of the Plan, 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 1 of Form 8-K promulgated under the
1934 Act, or, if such regulation is no longer in effect, any regulations
promulgated by the Securities and Exchange Commission pursuant to the 1934 Act
which are intended to serve similar purposes, or (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, as the case may be, and in the
case of (i) or (ii) 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 prior to such event. In addition, a Change in Control shall be
deemed to have occurred if, as the result of, or in connection with, any tender
or exchange offer, merger or other business combination, sale of assets or
contested election, or any combination of the foregoing transactions, the
persons who were directors of the Company before such transaction will cease to
constitute a majority of the Board of Directors of the Company or of any
successor institution.

SECTION 6. METHOD OF EXERCISE; PAYMENT OF PURCHASE PRICE

         6.1 Any option granted under the Plan may be exercised by the Optionee
by delivering to the Option Committee on any business day a written notice
specifying the number of shares of Common Stock the Optionee then desires to
purchase and specifying the address to which the certificates for such shares
are to be mailed (the "Notice"), accompanied by payment for such shares.

         6.2 Payment for the shares of Common Stock purchased pursuant to the
exercise of an option shall be made either in (i) cash equal to the option price
for the number of shares specified in the Notice (the "Total Option Price"), or
(ii) if authorized by the applicable option agreement, shares of Common Stock of
the Company having a fair market value, determined as provided in Section 5.4
hereof, equal to or less than the Total Option Price, plus cash in an amount
equal to the excess, if any, of the Total Option Price over the fair market
value of such shares of Common Stock, or (iii) with the consent of the Option
Committee, a combination of (i) and (ii). For the purpose of the preceding
sentence, the fair market value of the shares of Common Stock so delivered to
the Company shall be determined in accordance with procedures adopted by the
Board of Directors. As promptly as practicable after receipt of such written
notification and payment, the Company shall deliver to the Optionee certificates
for the number of shares with respect to which such Option has been so
exercised, issued in the



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Optionee's name; provided, however, that such delivery shall be deemed effected
for all purposes when the Company or a stock transfer agent of the Company shall
have deposited such certificates in the United States mail, addressed to the
Optionee, at the address specified pursuant to Section 6.1.

SECTION 7. ADJUSTMENT UPON CHANGES IN CAPITALIZATION

         7.1 The existence of outstanding options shall not affect in any way
the right or power of the Company or its stockholders to make or authorize any
or all adjustments, recapitalizations, reorganizations or other changes in the
Company's capital structure or its business, or any merger or consolidation of
the Company, or any issue of Common Stock, or any issue of bonds, debentures,
preferred or prior preference stock ahead of or affecting the Common Stock or
the rights thereof, or the dissolution or liquidation of the Company, or any
sale or transfer of all or any part of its assets or business, or any other
corporate act or proceeding, whether of a similar character or otherwise.

         7.2 If the Company shall effect a subdivision or consolidation of
shares or other capital readjustment, the payment of a stock dividend, or other
increase or reduction of the number of shares of the Common Stock outstanding,
without receiving compensation therefor in money, services or property, then (i)
the number, class, and per share price of shares of stock subject to outstanding
options hereunder shall be appropriately adjusted in such a manner as to entitle
an Optionee to receive upon exercise of an option, for the same aggregate cash
consideration, the same total number and class of shares as he would have
received as a result of the event requiring the adjustment had he exercised his
option in full immediately prior to such event; and (ii) the number and class of
shares with respect to which options may be granted under the Plan shall be
adjusted by substituting for the total number of shares of Common Stock then
reserved for issuance under the Plan that number and class of shares of stock
that would have been received by the owner of an equal number of outstanding
shares of Common Stock as the result of the event requiring the adjustment.

         7.3 Adjustments under this Section 7 shall be determined by the Option
Committee and such determinations shall be conclusive. The Option Committee
shall have the discretion and power in any such event to determine and to make
effective provision for acceleration of the time or times at which any option or
portion thereof shall become exercisable. No fractional shares of Common Stock
shall be issued under the Plan on account of any adjustment specified above.

         7.4 Except as hereinbefore expressly provided, the issue by the Company
of shares of stock of any class, or securities convertible into shares of stock
of any class, for cash or property, or for labor or services either upon direct
sale or upon the exercise of rights or warrants to subscribe therefor, or upon
conversion of shares or obligations of the Company convertible into such shares
or other securities shall not affect, and no adjustment by reason thereof shall
be made with respect to, the number or price of shares of Common Stock then



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subject to outstanding options.

SECTION 8. EFFECT OF CERTAIN TRANSACTIONS

         8.1 After a merger of one or more corporations into the Company, or
after a consolidation of the Company and one or more corporations in which the
Company shall be the surviving corporation, each holder of an outstanding option
shall, at no additional cost, be entitled upon exercise of such option to
receive (subject to any required action by stockholders) in lieu of the number
of shares as to which such option shall then be so exercisable, the number and
class of shares of stock or other securities to which such holder would have
been entitled pursuant to the terms of the agreement of merger or consolidation
if, immediately prior to such merger or consolidation, such holder had been the
holder of record of a number of shares of Common Stock equal to the number of
shares as to which such option shall be so exercised.

         8.2 If the Company is merged into or consolidated with another
corporation under circumstances where the Company is not the surviving
corporation, or if the Company is liquidated, or sells or otherwise disposes of
substantially all its assets to another corporation while unexercised options
remain outstanding under the Plan, (i) subject to the provisions of clause (iii)
below, after the effective date of such merger, consolidation, liquidation, sale
or disposition, as the case may be, each holder of an outstanding option shall
be entitled, upon exercise of such option, to receive, in lieu of shares of
Common Stock, shares of such stock or other securities, cash or property as the
holders of shares of Common Stock received pursuant to the terms of the merger,
consolidation, liquidation, sale or disposition; (ii) the Board of Directors may
accelerate the time for exercise of all unexercised and unexpired options to and
after a date prior to the effective date of such merger, consolidation,
liquidation, sale or disposition, as the case may be, specified by the Board; or
(iii) all outstanding options may be cancelled by the Board of Directors as of
the effective date of any such merger, consolidation, liquidation, sale or
disposition provided that (x) notice of such cancellation shall be given to each
holder of an option and (y) each holder of an option shall have the right to
exercise such option to the extent that the same is then exercisable or, if the
Board of Directors shall have accelerated the time for exercise of all
unexercised and unexpired options, in full during the 30-day period preceding
the effective date of such merger, consolidation, liquidation, sale or
disposition.

SECTION 9. RELEASE OF FINANCIAL INFORMATION

         A copy of the Company's annual report to stockholders shall be
delivered to each Optionee at the time such report is distributed to the
Company's stockholders. Upon request, the Company shall furnish to each Optionee
a copy of its most recent annual report and each quarterly report and current
report filed under the 1934 Act since the end of the Company's prior fiscal
year.


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SECTION 10. AMENDMENT OF THE PLAN

         The Board of Directors may amend the Plan at any time, and from time to
time, subject to any required regulatory approval and to the limitation that,
except as provided in Sections 7 and 8 hereof, no amendment shall be effective
unless approved by the stockholders of the Company in accordance with applicable
law and regulations at an annual or special meeting held within twelve months
before or after the date of adoption of such amendment, where such amendment
will:

         (a) increase the number of shares of Common Stock as to which options
may be granted under the Plan;

         (b) change in substance Section 4 hereof relating to eligibility to
participate in the Plan;

         (c) change the minimum option price; or

         (d) increase the maximum term of options provided herein.

         Except as provided in Sections 7 and 8 hereof, rights and obligations
under any option granted before any amendment of the Plan shall not be altered
or impaired by such amendment, except with the consent of the Optionee.

SECTION 11. NON-EXCLUSIVITY OF THE PLAN

         Neither the adoption of the Plan by the Board of Directors nor the
submission of the Plan to the stockholders of the Company for approval shall be
construed as creating any limitations on the power of the Board of Directors to
adopt such other incentive arrangements as it may deem desirable, including,
without limitation, the granting of stock options otherwise than under the Plan,
and such arrangements may be either applicable generally or only in specific
cases.

SECTION 12. GOVERNMENT AND OTHER REGULATIONS; GOVERNING LAW

         12.1 The obligation of the Company to sell and deliver shares of Common
Stock with respect to options granted under the Plan shall be subject to all
applicable laws, rules and regulations, including all applicable federal and
state securities laws, and the obtaining of all such approvals by government
agencies as may be deemed necessary or appropriate by the Option Committee.

         12.2 The Plan shall be governed by Massachusetts law, except to the
extent that such law is preempted by federal law.



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         12.3 The Plan is intended to comply with Rule 16b-3 under the 1934 Act.
Any provision inconsistent with such Rule shall be inoperative and shall not
affect the validity of the Plan.

SECTION 13. EFFECTIVE DATE OF PLAN; STOCKHOLDER APPROVAL

         The Plan shall become effective upon commencement of the public
offering in connection with the conversion of Abington Savings Bank (the "Bank")
to a stock form bank, or, if no public offering is held, immediately prior to
the consummation of the conversion, provided, however, that the Plan shall be
subject to (i) the approval of the Bank's stockholders in accordance with
applicable laws and regulations at an annual or special meeting held within
twelve months of such effective date and (ii) the approval of the Commissioner
of Banks of The Commonwealth of Massachusetts if required by applicable law or
regulation. No options granted under the Plan prior to such regulatory and
stockholder approvals may be exercised until such approvals have been obtained.
No option may be granted under the Plan after the tenth anniversary of the
effective date of the Plan.



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