SEVERANCE AGREEMENT

     Agreement  made this 1st day of  January,  2001,  by and  between  Nazareth
National Bank & Trust Co., a banking association organized under the laws of the
United States ("Bank") and S. Eric Beattie, an individual ("Employee").

                                   BACKGROUND

     Effective  January 1, 2001 and subject to the terms of this Agreement,  the
Bank will continue to employ Employee as President and Chief  Executive  Officer
of the Bank,  and to perform  such other duties as may be assigned to him by the
Board of  Directors  of the  Bank.  Employee  agrees  to serve  the Bank in this
capacity on a full-time basis, and to perform such duties faithfully, diligently
and to the best of his ability.  Employee further agrees to fully cooperate with
the  officers and  employees of the Bank to the best of his ability,  and not to
engage in any outside for profit  business deemed to be in conflict with general
commercial banking,  employment or commercial activity without the prior written
consent of the Board of  Directors of the Bank.  The Bank and  Employee  wish to
provide for the payment of certain  compensation  and other benefits to Employee
upon the occurrence of certain events, all as more fully set forth below.

     In consideration of the mutual covenants and agreements  herein  contained,
and intending to be legally bound hereby, the parties agree as follows:

     1. Term.  This Agreement shall begin on January 1, 2001 and shall terminate
at the earliest of the following dates (the "Term"):  (a) the date Employee dies
or becomes  permanently  disabled (i.e.,  upon his failure to render services of
the  character  which he had  previously  rendered  to the Bank,  because of his
physical   or   mental  illness  or  other  incapacity  beyond his control for a

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continuous period of six months or for shorter periods aggregating six months in
any twelve month period);  (b) the date of termination of Employee's  employment
with the Bank for cause (as  hereinafter  defined);  (c) the date  specified  by
mutual agreement of the Bank and Employee;  (d) subject to Section 2 hereof, the
date of  termination  by  Employee  of  Employee's  employment  with the Bank by
resignation or otherwise;  (e) December 31, 2001. If this  Agreement  expires on
December  31,  2001  pursuant to (e) of the  foregoing  sentence  ("the  Initial
Term"),  it shall renew  automatically  for  successive  terms of up to one year
beginning on January 1 of the applicable succeeding year ("Successive Term(s)"),
provided  neither of the parties has given written  notice to the other party of
his or its intention not to renew at least two months prior December 31, 2001 or
December 31 of the applicable  succeeding year. In the event that this Agreement
is renewed pursuant to the foregoing sentence,  the Agreement shall terminate on
the earliest of the following dates: (i) a date listed in the (a) through (d) of
the  first  sentence  of this  paragraph;  (ii)  December  31 of the  applicable
succeeding year. If Employee's employment with the Bank is terminated during the
Initial  Term or any  Successive  Term  (other  than as set  forth in  Section 2
hereof),  Employee shall have no rights or benefits under this Agreement  except
to receive payment of base salary through the effective date of his termination.
For purposes of this  Agreement,  the term "cause" shall mean (i)  conviction of
Employee for any felony,  fraud or embezzlement  or (ii)  Employee's  failure or
refusal to comply with the written policies or written  directives of the Bank's
Board of Directors or Employee being guilty of misconduct in connection with the
performance  of his duties for the Bank,  provided  Employee  fails to cure such
non-compliance  or misconduct within twenty (20)  days  after receiving  written

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notice from the Bank's  Board of Directors  specifying  such  non-compliance  or
misconduct.

     2.  Termination.  If during the Initial Term or any Successive Term of this
Agreement Employee's  employment with the Bank is terminated as set forth below,
the Bank will pay the  Employee  the  amount  set forth in  Section 3 hereof and
Employee shall be entitled to the benefits set forth in Section 4 hereof:

          (a) the Bank  terminates  Employee's  employment with the Bank without
     cause; or

          (b) Employee  terminates  his  employment  with the Bank:  (i) for any
     reason at any time within  eighteen  months  after a "change in control" of
     the Bank (as defined  hereinafter),  or (ii) due to the fact that,  without
     Employee's  consent  and whether or not a change of control of the Bank has
     occurred,  the nature and scope of  Employee's  duties and authority or his
     responsibilities  with the Bank or the  surviving or  acquiring  person are
     materially  reduced  to a level  below  that  which he  enjoys  on the date
     hereof,  his then  current  base annual  salary is reduced to a level below
     that which he enjoys on the date hereof or at any time hereafter (whichever
     may be  greater),  Employee's  position  or  title  with  the  Bank  or the
     surviving  or  acquiring  person is  materially  reduced  from his  current
     position  or  title  with  the  Bank,  or  Employee's  principal  place  of
     employment with the Bank is changed to a location  greater than fifty miles
     from his current  principal  place of employment  with the Bank,  provided,
     however,  that for any  termination  by Employee under this clause (ii) the
     Employee shall have first given the Bank written notice of his intention to
     terminate  his  employment  pursuant to this clause  (ii),  specifying  the
     reason(s) for such termination, and provided further, that the Bank shall

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     the Bank shall not have cured or remedied the  reason(s)  specified in such
     notice prior to the  expiration  of twenty (20) days after  receipt of such
     written notice.

          (c) For  purposes of this  Agreement,  a "change in control"  shall be
     deemed to have occurred upon the happening of any of the following events:

               (1) A change  within a twelve  month  period in a majority of the
          members of the Board of Directors of the Bank or its holding  company,
          First Colonial Group, Inc. (the "Holding Company");

               (2) A change  within a twelve month period in the holders of more
          than 50% of the  outstanding  voting  stock of the Bank or its Holding
          Company;  or

               (3) Any other event deemed to constitute a "change in control" by
          the  Board of  Directors  of the  Bank.

     3.  Termination  Payments to  Employee.  Commencing  not later than 30 days
after the date Employee's  employment  with the Bank is terminated  pursuant any
event  enumerated in subsection  (a) or subsection  (b) of Section 2 hereof (the
"Termination Date") and subject to Employee's  compliance with Section 8 hereof,
the Bank shall pay compensation to Employee for a period of eighteen (18) months
following  the  Termination  Date ("the  Severance  Period") at a per annum rate
equal to 100% of the amount of the Employee's Highest Annual Compensation during
the three calendar years ending prior to the Termination Date (the  "Measurement
Period"). For purposes of this Agreement, the term "Highest Annual Compensation"
shall mean Employee's  highest annual cash  compensation  during a calendar year
during the  Measurement  Period,  excluding  cash bonuses under the Bank's bonus
plans, if any, and excluding other fringe benefits. The Bank agrees that it will
make the  payments due  under Section 3 on the first day of each month following

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the  Termination  Date in an amount equal to 1/12 of 100% of Employee's  Highest
Annual  Compensation.  If  Employee's  employment  with the  Bank is  terminated
pursuant to any event  enumerated in subsection (a) or subsection (b) of Section
2  hereof,  Employee  shall  have  a  duty  to  seek  substantially   equivalent
employment.  The  payments  required  by this  Section 3 shall be  reduced  on a
dollar-for-dollar  basis by any income or earnings received by Employee from any
other  employer or by any income or  earnings  obtained  from any other  working
activity in which  Employee may engage  during the  Severance  Period.  Employee
shall notify the Bank  promptly of his receipt of any income or earnings  during
the Severance Period.

     4. Other Benefits.  In addition to the  compensation set forth in Section 3
hereof,  Employee  shall be entitled to the following  benefits from the Bank in
the event that Employee's employment with the Bank is terminated pursuant to any
event enumerated in subsection (a) or subsection (b) of Section 2 hereof:

          (a)  for  a  period  of  one  year  following  the  Termination  Date,
     reimbursement   for  all  reasonable   expenses  incurred  by  Employee  in
     connection  with  the  search  for  new  employment,   including,   without
     limitation,  those of a placement agency or service,  and reimbursement for
     all reasonable  relocation expenses incurred by Employee in connection with
     securing new employment;  provided,  however, in no event shall the Bank be
     obligated  to  reimburse  Employee in excess of 1/3 of his  Highest  Annual
     Compensation  for the sum of  Employee's  search  and  relocation  expenses
     hereunder.

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          (b)  for  the  Severance   Period,   Employee  shall  be  entitled  to
     participate  in the following  group  programs of the Bank if such programs
     are in effect at the  Termination  Date (or, if such  participation  is not
     permitted  by  the  terms  of the  group  programs,  through  substantially
     equivalent  benefits),  with the Bank paying for the  Employee's  continued
     participation  in such group  programs at the same annual rate at which the
     Bank was paying on the Termination Date: all medical, hospitalization, life
     and disability  group  insurance  benefits which existed at the Termination
     date,  except  that  should  other  subsequent  employment  be  obtained by
     Employee  during  the  Severance  Period,   continuation  of  any  medical,
     hospitalization,  life and  disability  group  insurance  benefits  will be
     offset by coverages provided through the Employee's subsequent employer.

          (c)  If  permitted  by the  terms  thereof,  Employee  will  remain  a
     participant of the Bank's defined benefit pension plan.

     5. Withholding.  The Bank may withhold from any benefits payable under this
Agreement all federal,  state, city or other taxes as shall be required pursuant
to any law or governmental regulation or ruling.

     6. Source of Payment.  All payments  provided under this Agreement shall be
paid by the Bank from such funds as the Board of  Directors  shall direct in its
sole and absolute  discretion.  No special or separate fund shall be required to
be established and Employee shall have no right, title or interest whatsoever in
or to any  investment  which  the Bank may make to aid the Bank in  meeting  its
obligations hereunder.  Nothing contained in this Agreement, and no action taken
pursuant to its provisions, shall create or be contrued to create a trust of any

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kind or a  fiduciary  relationship  between  the Bank and  Employee or any other
person.

     7. (a) Nonassignability. Neither  this  Agreement nor any right or interest
hereunder shall be assignable by Employee or his legal  representatives  without
the Bank's prior written consent.

        (b) Attachment.Except as required by law, the right to receive  payments
under this Agreement shall not be subject to  anticipation,  sale,  encumbrance,
charge, levy, or similar process or assignment by operation of law.

         8. Confidentiality and Non-Competition. All payments to Employee under
this Agreement shall be subject to Employee's compliance with the provisions of
this Section 8. If Employee fails to comply with such provisions, his right to
any future payments under this Agreement shall terminate and the Bank's
obligations under this Agreement to make such payments and provide such benefits
shall cease.

          (a) Employee covenants and agrees that he will not, during the term of
     his  employment  or at any time  thereafter,  except with the express prior
     written consent of the Bank or pursuant to the lawful order of any judicial
     or administrative agency of government,  directly or indirectly,  disclose,
     communicate or divulge to any person, or use for the benefit of any person,
     any knowledge or information  with respect to the conduct or details of the
     Banks' business which he, acting reasonably,  believes or should believe to
     be of a  confidential  nature and the  disclosure of which not to be in the
     Bank's interest.

          (b) Employee covenants and agrees that he will not, during the term of
     his  employment  or for a period of one year  thereafter,  except  with the
     express prior

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     written consent of the Bank,  directly or indirectly,  whether as employee,
     owner, partner, consultant, agent, director, officer, shareholder or in any
     other  capacity,  engage  in or assist  any  person to engage in any act or
     action which he,  acting  reasonably,  believes or should  believe would be
     harmful or inimical to the interests of the Bank.

          (c) Employee covenants and agrees that he will not, during the term of
     his  employment  or for a period of one year  thereafter,  except  with the
     express prior written consent of the Bank, in any capacity (including,  but
     not limited to, owner, partner,  shareholder,  consultant, agent, employee,
     officer,  director  or  otherwise),  directly  or  indirectly,  for his own
     account  or for the  benefit of any  person,  engage or  participate  in or
     otherwise be connected  with any  commercial  bank which has its  principal
     office in Lehigh,  Northampton or Monroe Counties in Pennsylvania or Warren
     County in New Jersey, except that the foregoing shall not prohibit Employee
     from owning as a shareholder  less than 1% of the  outstanding  stock of an
     issuer whose stock is publicly traded.

          (d) The  parties  agree  that any  breach  by  Employee  of any of the
     covenants  or  agreements  contained  in  this  Section  8 will  result  in
     irreparable injury to the Bank for which money damages could not adequately
     compensate  the Bank and  therefore,  in the event of any such breach,  the
     Bank shall be entitled (in addition to any other rights and remedies  which
     it may  have  at law or in  equity)  to have an  injunction  issued  by any
     competent court enjoining and restraining  Employee and/or any other person
     involved therein from continuing such breach. The existence of any claim or
     cause of  action  which  Employee  may have  against  the Bank or any other

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     person  (other  than a claim for the Bank's  breach of this  Agreement  for
     failure to make payments  hereunder)  shall not constitute a defense or bar
     to the enforcement of such covenants.

          (e) If any portion of the  covenants or  agreements  contained in this
     Section  8, or the  application  hereof,  is  construed  to be  invalid  or
     unenforceable,  the other portions of such  covenant(s) or  agreement(s) or
     the application thereof shall not be affected and shall be given full force
     and effect without regard to the invalid or  unenforceable  portions to the
     fullest extent possible.  If any covenant or agreement in this Section 8 is
     held  unenforceable  because of the geographic  area covered,  the duration
     thereof,  or the scope  thereof,  then the court making such  determination
     shall have the power to reduce the area and/or  duration  and/or  limit the
     scope thereof,  and the covenant or agreement  shall then be enforceable in
     its reduced form.

          (f) For purposes of this Section 8, the term "the Bank" shall  include
     the Bank, any successor to the Bank under Section 9 hereof, and all present
     and future direct and indirect subsidiaries and affiliates of the Bank.

     9. Successors and Assigns. This Agreement shall inure to the benefit of and
be binding  upon any  corporate or other  successor of the Bank which  acquires,
directly or indirectly, by merger, consolidation, purchase, or otherwise, all or
substantially  all of the assets of the Bank, and shall  otherwise  inure to the
benefit of and be binding upon the parties  hereto and their  respective  heirs,
executors,  administrators,  successors  and assigns.  Nothing in the  Agreement
shall  preclude  the  Bank  from  consolidating  or  merging  into  or  with  or
transferring all or substantially  all of its assets to another person.  In that
event,  such other person shall assume this Agreement and all obligations of the
Bank  hereunder. Upon  such a consolidation,  merger, or  transfer of assets and

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assumption, the term "the Bank" as used herein, shall mean such other person and
this Agreement shall continue in full force and effect.

     10.  Waivers  Not to be  Continued.  Any waiver by a party of any breach of
this Agreement by another party shall not be construed as a continuing waiver or
as a consent to any subsequent breach by the other party.

     11.  Notices.  All  notices,  requests,  demands  and other  communications
hereunder  shall be in  writing  and shall be deemed to have been duly  given if
delivered  by hand or mailed,  certified  or  registered  mail,  return  receipt
requested,  with postage  prepared,  to the  following  address or to such other
address as either party may designate by like notice:

     A. If to  Employee,  to:

                   S. Eric  Beattie
                   2841 Hope  Ridge  Drive
                   Easton, Pennsylvania 18045

     B. If to the Bank, to:

                   Nazareth National Bank and Trust Co.
                   76 South Main Street
                   Nazareth, Pennsylvania  18064

and to such other or  additional  person or persons as either  party  shall have
designated to the other party in writing by like notice.

     12. Jurisdiction.  Bank and Employee consent to the exclusive  jurisdiction
or the courts or the Commonwealth of Pennsylvania and the United States District
Court for the Eastern  District of  Pennsylvania  in any and all actions arising
hereunder and irrevocably  consent to service of process as set forth in Section
11 hereof.

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     13. General Provisions.

     (a) This Agreement  constitutes  the entire  agreement  between the parties
with respect to the subject matter hereof, and supersedes and replaces all prior
agreements  between the parties.  No amendment,  waiver or termination of any of
the  provisions  hereof shall be  effective  unless in writing and signed by the
party against whom it is sought to be enforced. Any written amendment, waiver or
termination  hereof executed by the Bank and Employee shall be binding upon them
and upon all other persons, without the necessity of securing the consent of any
other person and no person shall be deemed to be a third party beneficiary under
this Agreement. (

     b) This Agreement shall not limit or infringe upon the right of the Bank to
terminate the  employment  of Employee at any time for any reason,  nor upon the
right of Employee to terminate his employment with the Bank.

     (c) The term  "person" as used in this  Agreement  means a natural  person,
joint venture,  corporation,  sole proprietorship,  trust, estate,  partnership,
cooperative,   association,   non-profit   organization  or  any  other  legally
cognizable entity.

     (d) This  Agreement  may be executed in one or more  counterparts,  each of
which  shall be  deemed  an  original,  but all of which  taken  together  shall
constitute one and the same Agreement.

     (e) No failure on the part of any party  hereto to exercise and no delay in
exercising  any  right,  power or remedy  hereunder  shall  operate  as a waiver
thereof;  nor shall any single or partial exercise of any right, power or remedy
hereunder  preclude any other or further exercise thereof or the exercise of any
other rights, power or remedy.

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     (f) The headings of the sections of this  Agreement  have been inserted for
convenience  of reference only and shall in no way restrict or modify any of the
terms or provisions  hereof.  (g) This Agreement shall be governed and construed
and the legal  relationships  of the parties  determined in accordance  with the
laws of the Commonwealth of Pennsylvania applicable to contracts executed and to
be performed solely in the Commonwealth of Pennsylvania.


                                            NAZARETH NATIONAL BANK & TRUST CO.

(Corporate Seal)                            By: _____________________________


                                            ATTEST: ________________________

Witness:
_______________________                     ____________________________(SEAL)
                                            S. ERIC BEATTIE