AGREEMENT
         This Agreement  ("Agreement") is made this 27th day of December,  2001,
by and  between  Nazareth  National  Bank & Trust  Co.,  a  banking  association
organized under the laws of the United States  ("Bank") and Scott V. Fainor,  an
individual ("Employee").
                                   BACKGROUND
         Effective  January 3, 2002 or such later date as agreed by the parties,
("Start Date") and subject to the terms of this Agreement,  the Bank will employ
Employee to serve as President and Chief  Executive  Officer of the Bank,  First
C.G. Co., Inc. ("First") and First Colonial Group, Inc. ("Holding  Company") and
to perform such other duties as may be assigned to him by the Board of Directors
of the Bank.  It is the  intention of the Boards to elect  Employee to a seat on
the Boards of the Bank,  First and Holding Company as soon as possible after the
Start Date.  Employee agrees to serve the Bank, First and the Holding Company 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 and the Holding Company 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,  which consent  shall not be  unreasonably  withheld.  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:


<PAGE>

         1.  Term.  This  Agreement  shall  begin on the  Start  Date 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
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, 2006. If this Agreement expires on
December 31, 2006 pursuant to clause (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, 2006 or
December 31 of the applicable  Successive Term. 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 clauses (a) through
(d) of the  first  sentence  of  this  paragraph;  or  (ii)  December  31 of the
applicable Successive Term. 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


                                       2
<PAGE>

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  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 due to the fact
that,  without  Employee's  consent  and  whether or not a change of control (as
defined  hereinafter)  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  Salary  (as  defined  in and
calculated  pursuant  to Exhibit A attached  hereto) is reduced to a level below
that which he enjoys on the date hereof or at any time hereafter  (whichever may
be greater),  Bank fails to pay or provide  Employee the Annual  Bonuses,  Stock
Award or Stock  Options  (as  defined in and  calculated  pursuant  to Exhibit A
attached hereto), 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 (b) the  Employee  shall have first  given the Bank


                                       3

<PAGE>

written  notice of his  intention to terminate his  employment  pursuant to this
clause (b), specifying the reason(s) for such termination, and provided further,
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:
                  (i) a change in at least five members of the Holding Company's
Board of  Directors  or the  addition of five or more new members to the Holding
Company's Board of Directors or any combination of the foregoing, within any two
calendar year period, unless such change or addition occurs with the affirmative
vote in writing of Employee in his capacity as a director or a shareholder; or

                  (ii) a person  or group  acting in  concert  as  described  in
Section  13(d)(2)  of the  Securities  Exchange  Act of 1934,  as  amended  (the
"Exchange  Act")  proposes to hold or acquire  beneficial  ownership  within the
meaning  of Rule  13(d)(3)  promulgated  under the  Exchange  Act of a number of
voting  shares of the Holding  Company  which  constitutes  either (A) more than
fifty  percent  (50%) of the shares  which voted in the election of directors of
the Holding  Company at the  shareholders'  meeting  immediately  preceding such
determination  or  (B)  more  than  thirty  percent  of  the  Holding  Company's
outstanding  voting  shares.  The term  "proposes to hold or acquire" shall mean
when a person or group  acting in concert  has (A) the right to acquire or merge
(whether such right is exercisable immediately or only after the passage of time
or upon the receipt of such  regulatory  approvals as is required by  applicable
law) pursuant to an agreement,  arrangement or understanding  (whether or not in
writing) or upon the exercise or conversion of rights, exchange rights, warrants
or options or otherwise;  (B) commenced a tender or exchange  offer with respect




                                       4
<PAGE>

to the  voting  shares of the  Holding  Company  or  securities  convertible  or
exchangeable into voting shares of the Holding Company; or (C) the right to vote
pursuant  to any  agreement,  arrangement  or  understanding  (whether or not in
writing);  provided,  however, that such person or group acting in concert shall
not be deemed to have  acquired  such shares if the  agreement,  arrangement  or
understanding to vote such securities arises solely from a revocable proxy given
in response to a public proxy or consent  solicitation  made pursuant to, and in
accordance with, the applicable rules and regulations of the Exchange Act and is
not  also  then  reportable  on  Schedule  13D  under  the  Exchange  Act or any
comparable or successor report.

         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 the period  calculated  below
("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:  (a) "Severance Period" shall mean (i) a period of twelve (12) months
following the Termination Date if Employee's  employment is terminated  pursuant
to Section  2(a) or Section  2(b) of this  Agreement ( a "Covered  Termination")
during the period  beginning  on the Start Date and ending on the  business  day
prior to the first anniversary of the Start Date (the "First Anniversary"); (ii)
a period of eighteen (18) months  following the  Termination  Date if Employee's
employment is  terminated  pursuant to a Covered  Termination  during the period
beginning on the Second  Anniversary and ending on the business day prior to the
second anniversary of the Start Date (the "Second Anniversary");  (iii) a period
of  twenty-four  (24)  months  following  the  Termination  Date  if  Employee's




                                       5
<PAGE>

employment is terminated pursuant to Covered Termination at any time on or after
the Second Anniversary;  notwithstanding the foregoing, if Employee's employment
is  terminated  pursuant to Section  2(a) or Section 2(b) within  eighteen  (18)
months  after a change in  control (a  "Change  in  Control  Termination"),  the
Severance  Period shall mean: (iv) a period of twenty-four (24) months following
the Termination Date if Employee's employment is terminated pursuant to a Change
in Control  Termination during the period beginning on the Start Date and ending
on the business day prior to the First Anniversary;  (v) a period of thirty (30)
months  following the  Termination  Date if Employee's  Employment is terminated
pursuant to a Change in Control  Termination  during the period beginning on the
First   Anniversary  and  ending  on  the  business  day  prior  to  the  Second
Anniversary;  and  (vi)  a  period  of  thirty-six  (36)  months  following  the
Termination Date if Employee's  employment is terminated pursuant to a Change in
Control Termination at any time on or after the Second Anniversary;  and (b) the
term "Highest Annual  Compensation"  shall mean Employee's highest annual Salary
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 during the Severance  Period in an amount equal to 1/12 of 100% of
Employee's Highest Annual Compensation.
         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




                                       6
<PAGE>

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.

(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 if other subsequent  employment is 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.

         5.  Withholding.  The Bank may  withhold  from any  amounts or 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




                                       7
<PAGE>

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.

         7. (a) Nonassignability.Except as provided in Section 9 hereof, neither
this Agreement nor any right or interest hereunder shall be assignable by either
party without the other's prior written consent, which shall not be unreasonably
withheld.

         (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, if any, 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 and for a period  thereafter equal to the greater of (i) one year
after the  termination  of his employment or (ii) the Severance  Period,  except
with the express  prior  written  consent of the Bank,  directly or  indirectly,
whether as employee,  owner,  partner,  consultant,  agent,  director,  officer,


                                       8
<PAGE>

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 and for a period  thereafter equal to the greater of (i) one year
after the  termination  of his employment or (ii) the Severance  Period,  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:  (x) engage or  participate  in or  otherwise  be
connected  with any bank,  savings  and loan  association  or similar  financial
institution  which has an office in Lehigh,  Northampton  or Monroe  Counties in
Pennsylvania  or Warren  County in New Jersey,  or any other county in which the
Bank has an office as of the date of the  termination  of Employee's  employment
(collectively,  the  "Territory"),  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; or (y) communicate with or solicit any
person who is or during such  period  becomes a  customer,  borrower,  employee,
salesman, agent or representative of the Bank, in any manner which interferes or
might interfere with such person's  relationship  with the Bank, or in an effort
to obtain such  person as a customer,  borrower,  employee,  salesman,  agent or
representative of any business in competition with the Bank in the Territory.

         (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




                                       9
<PAGE>

(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,  if any,  required
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




                                       10
<PAGE>

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.

         10. Restricted Stock Award.

         (a) On the Start Date,  Employee  shall be granted 10,000 shares of the
Holding Company's common stock subject to certain  restrictions  described below
("Restricted Stock Award").  Shares of the Restricted Stock Award which have not
vested ("Restricted Stock") may not be sold, assigned,  transferred,  pledged or
otherwise  encumbered  by the Employee . Except as provided in Section 10(d) and
elsewhere in this  Agreement,  the Employee as owner of  Restricted  Stock shall
have all the rights of a stockholder, including the right to vote the shares.

         (b) The Restricted  Stock Award shall vest in equal 20% installments on
each  of the  first  five  anniversaries  of the  Start  Date.  Upon  each  such
anniversary  date,  the  restrictions  on such vested  portion of the Restricted
Stock Award shall lapse and a stock  certificate  evidencing such vested portion
shall be issued to Employee,  free of the Restrictive  Legend  (defined  below).
Notwithstanding  the foregoing,  any Restricted  Stock shall become fully vested
and the  restrictions on such shares shall lapse upon (i) a change in control or
(ii) the  termination  of  Employee's  employment  with the Bank pursuant to any
event enumerated in subsection (a) or subsection (b) of Section 2 hereof.

         (c)  Except  as  provided  in  Section  10(b)  hereof,   if  Employee's
employment  with the Bank terminates for any reason,  all Restricted  Stock (and
dividends and distributions  thereon) theretofore awarded to Employee, and which



                                       11
<PAGE>

at the time of such  termination of employment have not vested,  shall upon such
termination of employment be forfeited and returned to the Holding Company.

         (d) The payment to the Employee of cash  dividends  declared or paid on
such Restricted Stock by the Holding Company shall be deferred until the lapsing
of any  restrictions  imposed  under  paragraph  (a) of this  Section  10.  Such
deferred  dividends  shall be held by the Holding Company for the account of the
Employee.  Payment of deferred dividends (without interest) shall be made at the
same time as the shares of Restricted Stock with respect to which they were paid
vest under Section 10(b). Any shares of Common Stock paid as a stock dividend or
distribution  with respect to any Restricted Stock shall also become  Restricted
Stock subject to the terms of this Section 10 and shall vest at the same time as
the shares of Restricted Stock with respect to which they were issued vest under
Section 10(b).

         (e) Upon the termination of any vesting of any Restricted  Stock (or at
any such earlier time,  if any,  that an election is made by the Employee  under
Section 83(b) of the Code, or any successor  provision  thereto,  to include the
value of such shares in taxable income),  the Bank may withhold from any payment
or distribution  made under this Agreement  sufficient shares or may withhold or
cause to be paid by Employee sufficient cash to cover any applicable withholding
and employment  taxes.  No discretion or choice shall be conferred upon Employee
with respect to the form, timing or method of any such tax withholding.

         (f) Each certificate  representing Restricted Stock shall be registered
in the name of the Employee and deposited by the Employee, together with a stock
power endorsed in blank,  with the Bank pending the vesting of such shares,  and
shall bear the  following  (or a similar)  restricted  legend (the  "Restrictive
Legend"):



                                       12
<PAGE>

                  The  transferability  of this  certificate  and the  shares of
                  stock  represented   hereby  are  subject  to  the  terms  and
                  conditions  (including  forfeiture)  contained in an Agreement
                  between the holder and Nazareth National Bank & Trust Company,
                  a copy of which  is on file  with the  Secretary  of  Nazareth
                  National Bank & Trust Company, 76 South Main Street, Nazareth,
                  Pennsylvania 18064.

         To the extent shares of Restricted Stock have not been registered under
the federal and state securities laws or an exemption is otherwise  unavailable,
the certificates  for the Restricted  Stock shall bear the following  securities
legend:
                  The  shares  represented  by this  certificate  have  not been
                  registered  under the Securities  Act of 1933, as amended,  or
                  under  applicable  state securities laws. The shares have been
                  acquired  for  investment  and  may  not  be  offered,   sold,
                  transferred,  pledged  or  otherwise  disposed  of  without an
                  effective  registration  statement under the Securities Act of
                  1933, as amended,  and under any applicable  state  securities
                  laws or an opinion of counsel  acceptable  to the  Corporation
                  that  the  proposed  transaction  will  be  exempt  from  such
                  registration.

         The  foregoing  legend  shall  be  removed  upon  registration  of  the
Restricted  Stock under the  Securities  Act of 1933, as amended,  and under any
applicable  state laws or upon receipt of any opinion of counsel  acceptable  to
the Holding Company that said registration is no longer required.

         11. 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.

         12. 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:



                                       13
<PAGE>

A.       If to Employee, to:
                                    Scott V. Fainor
                                    1544 Duxbury Court
                                    Allentown, Pennsylvania  18104

B.       If to the Bank, to:
                                    Nazareth National Bank and Trust Co.
                                    Attn:  Chairman of the Board
                                    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.

         13.   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 12 hereof.

         14. General Provisions.

         (a) This Agreement  (including the  "Background"  section and Exhibit A
hereto,  which are  incorporated  herein by  reference  and made a part  hereof)
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.



                                       14
<PAGE>

         (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.

         (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)  Employee  represents  to Bank that (i) there are no  restrictions,
agreements or understandings whatsoever to which Employee is a party which would
prevent or make  unlawful  his  execution of this  Agreement  or his  employment
hereunder,  (ii) his execution of this  Agreement and his  employment  hereunder
shall not constitute a breach of any contract, agreement or understanding,  oral
or  written  to which he is a party or by which he is bound and (iii) he is free
and able to execute this Agreement and to enter into employment by Bank.

         (h) This  Agreement  shall be  governed  and  construed  and the  legal
relationships  of the  parties  determined  in  accordance  with the laws of the
Commonwealth of




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<PAGE>



Pennsylvania  applicable to contracts executed and to be performed solely in the
Commonwealth of Pennsylvania.

                                            NAZARETH NATIONAL BANK & TRUST CO.

(Corporate Seal)                            By: /s/
                                                --------------------------------


                                            ATTEST: /s/
                                                    ---------------------------

Witness:
/s/                                         /s/                          (SEAL)
-------------------------                   --------------------------------
SCOTT V. FAINOR




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<PAGE>


                         Exhibit A to Agreement between
           Nazareth National Bank & Trust Company and Scott V. Fainor

         Salary.  The Bank shall pay to Employee as  compensation  for  services
rendered  hereunder a base salary of $250,000  per year  ("Salary"),  payable in
accordance  with the Bank's normal  payroll  practices  for executive  officers.
Employee's  Salary shall be increased by a minimum of 5% effective as of January
1, 2003 if the net income of the Holding Company for the year ended December 31,
2002 (as reported in the Holding Company's  audited financial  statements) ("Net
Income")  meets or exceeds  the planned net income for such year as set forth in
the plan adopted by the Board of Directors for such year ("Planned Net Income").

         Bonus.  For each year that  Employee is employed by the Bank,  Employee
shall be entitled to receive as incentive  compensation a bonus ("Annual Bonus")
determined as follows:  (a) if the Net Income for such year is less than Planned
Net Income for such year, no Annual Bonus shall be payable for such year; (b) if
the Net Income for such year is equal to or greater  than Planned Net Income for
such year, Employee shall receive an Annual Bonus for such year equal to the sum
of (i) 35% of his Salary  for such year,  plus,  if  applicable,  (ii) 5% of the
amount,  if any, by which Net Income exceeds Planned Net Income (up to a maximum
bonus under this clause (ii) of $12,500  based on Net Income  exceeding  Planned
Net Income by $250,000),  plus, if applicable,  (iii) 10% of the amount, if any,
by which Net Income exceeds the sum of (A) Planned Net Income plus (B) $250,000;
provided,  however, that in no event shall the Annual Bonus paid with respect to
any year exceed 50% of the Salary paid to Employee for such year.

         Stock  Award.  On  the  Start  Date,  Employee  shall  be  granted  the
Restricted Stock Award described in Section 10 of the Agreement.

         Stock Options.  On the Start Date,  Employee shall be granted incentive
stock options to purchase  75,000 shares of the Holding  Company's  common stock
("Stock Options")  pursuant to the Holding Company's 2001 Stock Option Plan (the
"Plan") at an  exercise  price  equal to the fair  market  value of the  Holding
Company's  common stock as determined  pursuant to the Plan, which Stock Options
shall vest in equal annual  installments  over seven and  one-half  years and be
subject to the terms and  conditions  of the Plan and the form of option  award,
copies of which have been provided to Employee.

         Benefits. During Employee's employment, subject to the other provisions
of this  Agreement,  Employee  shall be  entitled  to  participate  and shall be
included  in any benefit  plan of the Holding  Company  generally  available  to
executive  officers  to the  extent  Employee  is  eligible  under  the  general
provisions  thereof,  as  such  plans  may  be  adopted,  amended,  modified  or
terminated from time to time hereinafter; provided, however, that Employee shall
not be entitled to  participate  in any bonus program or incentive  compensation
plan other than as set forth in this Schedule.  Without  limiting the generality
of the  foregoing:  (a) Employee  shall be entitled to participate in the Salary
Continuation Plan,  Supplemental  Retirement Plan, Supplemental Medical Benefits
Plan,  Employee  Stock  Ownership  Plan and  401(k)  plan,  as such plans may be
adopted, amended, modified or terminated from time to time hereinafter;  and (b)




                                       17
<PAGE>

Employee  shall be entitled to receive an  allowance  for general  business  and
development expenses incurred on behalf of the Bank of at least $25,000 per year
(collectively,  "Benefits"),  subject  to  submission  and  approval  of expense
reports in accordance with the Bank's policy.

         Other.  Nothing  herein  shall  prohibit  Bank from  paying  additional
discretionary bonus or authorize additional vested stock and/or stock options to
Employee



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