SEVERANCE AGREEMENT

     Agreement  made this 1st day of  January,  2001,  by and  between  Nazareth
National Bank and Trust Company, a banking association  organized under the laws
of the United States ("Bank") and Reid L. Heeren, an individual ("Employee").

                                   BACKGROUND

     Effective  January 1, 2001 and subject to the terms of this Agreement,  the
Bank  will  continue  to employ  Employee  in the  position  of  Executive  Vice
President and Chief Financial  Officer,  and to perform such other duties as may
be assigned to him by the  President of the Bank.  Employee  agrees to serve the
Bank in this capacity on a full-time  basis,  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 President 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
continuous period of six months or for shorter periods aggregating six months in

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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; or (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 to 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

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receiving  written  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 hereof,
the Employee's  employment with the Bank  is terminated as set forth
below,  the Bank will pay to  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, without Employee's consent, 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,

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     that 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 to 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 one year period following the
Termination  Date (the "Severance  Period") at a per annum rate equal to 100% of
Employee's  "base annual salary" on the  Termination  Date. For purposes of this
Agreement,  the term  "base  annual  salary"  shall mean the  Employee's  annual
compensation rate on the Termination Date exclusive of cash bonuses and payments
under the Bank's  bonus  plan(s),  if any. The Bank agrees that it will make the
payments due under this Section 3 on the first day of each month  following  the

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Termination  Date in an amount equal to 1/12 of 100% of  Employee's  base annual
salary  on the  Termination  Date.  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  the  Severance  Period,  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  base  annual  salary  on the  Termination  Date  for the sum of
     Employee's search and relocation expenses hereunder.

          (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

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     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 President  shall  direct.  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 construed to create a trust of any kind or a fiduciary  relationship  between
the Bank and Employee or any other person.

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     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 of  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 and 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 Bank's  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 and for a period of one year thereafter, except with the express
     prior  written  consent of the Bank,  directly  or  indirectly,  whether as
     employee, employer, owner, partner,  consultant,  agent, director, officer,
     shareholder  or in any other capacity,  engage  in or assist any  person to

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     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  and 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,
     employer, 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 either  Northampton,  Lehigh or Monroe Counties,  Pennsylvania or
     Warren  County,  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
     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.

<PAGE>

          (e) If any portion of the  covenants or  agreements  contained in this
     Section  8, or the  application  thereof,  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 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 may acquire,
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
assumption, the term "the Bank" as used herein, shall mean such other person and
this Agreement shall continue in full force and effect.

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     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  prepaid,  to the following  addresses or to such other
address as either party may designate by like notice:

                       If to Employee, to:
                       Mr. Reid L. Heeren
                       714 Lexington Road
                       Nazareth, Pennsylvania 18064

                       If to the Bank, to:

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

                       Attn:  Board of Directors

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. Applicable Law;  Jurisdiction.  This Agreement shall be governed by and
construed  and  enforced  in  accordance  with  the  substantive   laws  of  the
Commonwealth  of  Pennsylvania  with respect to contracts  executed in and to be
wholly   performed   therein.   Bank  and  Employee  consent  to  the  exclusive
jurisdiction of the Court of Common Pleas,  Northampton County,  Commonwealth of
Pennsylvania  and the United States  District Court for the Eastern  District of
Pennsylvania in any and all actions arising hereunder and irrecovably 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 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) Nothing contained herein shall be construed to require the Bank to
     violate applicable law,  including,  but not limited to, applicable banking
     laws and regulations,  and all obligations of the Bank under this Agreement
     shall be deemed to be qualified accordingly.

ATTEST:                             NAZARETH NATIONAL BANK AND
                                        TRUST COMPANY




By: _________________________       By:____________________________
                                       S. Eric Beattie, President


Witness:


____________________________           ____________________________(SEAL)
                                       Reid L. Heeren