Incentive & Nonqualified Stock Option Plan

ABINGTON BANCORP, INC.


INCENTIVE AND NONQUALIFIED STOCK OPTION PLAN


As amended and restated
Effective January 31, 1997 2
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


-1- 3
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


-2- 4 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 exten ...