RETIREMENT AGREEMENT

         This Agreement is made as of July 19, 2001, by and between Nazareth
National Bank & Trust Co., a banking association organized under the laws of the
United States ("Bank"), First Colonial Group, Inc., a Pennsylvania corporation
("FCG"), and S. Eric Beattie ("Beattie").

                                   Background

         Beattie is the President and Chief Executive Officer ("CEO") of the
Bank and FCG, and a member of the Board of Directors of both the Bank and FCG
(collectively the "Board"), having served faithfully, diligently and to the best
of his ability since he was hired by the Bank on July 5, 1977.

         Beattie and the Bank have agreed that he will retire from employment
with the Bank and FCG effective December 31, 2001.

         Beattie the Bank and FCG wish to provide for a smooth transition in the
leadership of the Bank and FCG, and for fair and reasonable retirement terms.

                                      Terms

         Accordingly, in consideration of the mutual covenants and agreements
set forth below, and intending to be legally bound, the parties agree as
follows:

         1. Beattie will resign as President, CEO, and an employee of the Bank
         and FCG and of all affiliated entities, effective at the close of
         business on December 31, 2001. He will continue to perform all his
         duties and responsibilities through that date; provided, however, that
         the Board may relieve him of his duties and responsibilities and place
         him on leave of absence earlier in its discretion. His current total
         compensation package, including bonus (which will be awarded consistent
         with past practice), will remain in place through December 31, 2001,
         regardless of whether he is relieved of duties earlier, provided
         however that any bonus will be in the form of cash rather than stock
         options.

         2. Beattie will remain and serve as a member of the Boards of Directors
         of the Bank, FCG and of all affiliated entities, until December 31,
         2001 or until such earlier time as the Bank and/or FCG requests him to
         resign from those positions. Simultaneously with Beattie's resignation
         from the Board of Directors of the Bank, FCG and of all affiliated
         entities, Beattie shall resign as a trustee of all employee benefit
         trusts and other trusts sponsored by or otherwise related to the Bank
         or FCG or any of their affiliated entities. Beattie agrees that he will
         execute the undated letter of resignation attached hereto as Exhibit A,
         contemporaneously with the execution of this Agreement. For so long as
         he remains a member of the Board, or until December 31, 2001, whichever
         is later, Bank and FCG will pay Beattie monthly directors' fees
         consistent with past practice.



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<PAGE>

         3. Beattie's resignation shall be deemed to be an election by Beattie
         to terminate his employment, as that phrase is used in Section I.C. of
         the Executive Benefit Agreement dated October 9, 1985. Bank agrees that
         it has no right to terminate its obligations with respect to Beattie
         under this agreement. Beattie shall receive benefits under that
         agreement in accordance with its terms, and as supplemented as provided
         in P. 5.a., below.

         4. For the purposes of the Severance Agreement between the parties
         dated January 1, 2001 (Severance Agreement), Beattie's employment will
         be deemed to have been terminated by the Bank without cause effective
         at the close of business on December 31, 2001. Accordingly,

          a.   Beattie will receive Termination Payments as set forth in P. 3 of
               the Severance Agreement, provided, however, that (i) Beattie
               shall not have any duty to seek substantially equivalent
               employment, (ii) in no event will payments be reduced, on a
               dollar-for-dollar basis or otherwise, by any income or earnings
               received by Beattie from any other employer or from any other
               working activity in which Beattie may engage during the Severance
               Period, and (iii) Beattie shall have no obligation to notify the
               Bank of his receipt of any income or earnings during the
               Severance Period.

          b.   Beattie shall be reimbursed for all reasonable expenses incurred
               as set forth in, and subject to the limits contained in, P. 4(a)
               of the Severance Agreement, which payments shall be deemed
               reimbursement of employment related expenses not subject to
               payroll or withholding taxes.

          c.   During the Severance Period, Beattie shall remain a participant
               in, and receive the benefits set forth in and upon the terms
               stated in P. P. 4(b) and (c) of the Severance Agreement. The
               parties expressly agree the Medical Expense Reimbursement Plan in
               which Beattie currently participates is among the benefits
               encompassed by P. 4(b). The parties also agree that, to the
               extent permitted by the relevant Plans, Beattie will receive ESOP
               contributions and 401(k) matching contributions during the
               Severance Period.

          d.   In all other respects, the Severance Agreement will remain in
               full force and effect.

         5. As further consideration for Beattie agreeing to continue in the
         active employ of the Bank and FCG and its affiliated entities until
         December 31, 2001, or such earlier date as the Board may place him upon
         leave of absence, and agreeing to resign from the Bank's Board of
         Directors and of the Board of Directors of FCG, upon request as set
         forth in P. 2, above, and in consideration of Beattie's performance of
         all such agreements, Bank agrees to provide the following additional
         benefits:



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          a.   Bank agrees to calculate the monthly benefit to which Beattie is
               entitled under the Executive Benefit Agreement dated October 9,
               1985 without taking the percentage deduction provided in Section
               I, P. C.3.

          b.   Bank will transfer to Beattie all of its right, title and
               interest in Beattie's long term care policy, which Beattie
               thereafter will be permitted to continue to maintain at his
               expense.

          c.   All of Beattie's stock options which have not vested as of the
               close of business on December 31, 2001, will be deemed to vest on
               that date. Thereafter, Beattie's rights to exercise such options
               shall be governed by the Plans pursuant to which the options were
               granted.

         6. A press release, in the form attached hereto as Exhibit B, will be
         issued at such time as the Board determines to be appropriate.

         7. Beattie and Bank are parties to a Deferred Compensation Agreement
         dated December 31, 1993. Pursuant to that agreement, Beattie has
         deferred 100% of his director's compensation into the Defined Benefit
         "Directors' Deferred Compensation Plan." In accordance with P. 3(a) of
         that agreement, distribution of the amounts deferred shall begin at the
         beginning of the month following termination of Beattie's service as a
         director of the Bank. Beattie hereby elects to defer zero percent (0%)
         of his director's compensation effective January 1, 2002, and the Bank
         agrees that receipt of this Agreement constitutes filing by Beattie of
         such election.

         8. Each party will bear his/its own attorneys' fees and costs in
         connection with the negotiation, execution and implementation of this
         Agreement.

         9. Beattie agrees that the monetary terms of this Agreement are
         confidential. He will not disclose or publicize the amounts paid or
         agreed to be paid pursuant to this Agreement to any person or entity,
         except as required by law or to his spouse, attorney or accountant, or
         to a government agency for the purposes of the payment or collection of
         taxes, all of whom he shall request and, to the extent he legally can
         do so, shall obligate them to maintain the confidentiality of this
         Agreement.

         10. Each of the parties agrees that he/it will make no comments, either
         orally or in writing, or take other actions which tend to publicly
         disparage the personal or professional reputation of the other.

         11. Beattie hereby releases and forever discharges Bank, FCG, its
         predecessors, successors, assigns, and all of its affiliated entities,
         directors, officers, employees, shareholders, agents, accounting firm,
         law firms and each of the members thereof (in both their individual and
         official capacities) (all such entities and persons hereafter being


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         referred to collectively in this Agreement as "Releasees"), and each of
         them, from any and all claims, debts, agreements (excluding only this
         Agreement and the agreements specifically referred to herein as the
         same may be modified by this Agreement), complaints or causes of action
         (hereinafter, collectively, "Claims"), whether known or unknown,
         whether suspected or unsuspected, that he ever had, now has, or may
         have against any or all of the Releasees, for, upon, or by reason of
         any cause, matter, thing or event whatsoever occurring at any time up
         to and including the date and time he signs this Agreement. This means
         that Beattie is waiving and giving up any right he may have to sue Bank
         and any other Releasee on or for any Claims within the scope of this
         paragraph. The Claims within the scope of this paragraph and covered by
         this release and waiver include, but are not limited to, (i) any Claim
         at common law, such as any Claim for breach of an express or implied
         contract, estoppel, defamation, or any other tort; (ii) any Claim based
         on or arising under any employment statutes or ordinances, such as the
         federal Age Discrimination in Employment Act, Title VII of the Civil
         Rights Act of 1964, the Americans with Disabilities Act, the
         Pennsylvania Human Relations Act; (iii) any Claim based on or arising
         out of Beattie's employment and association with Bank and/or the
         termination thereof; and (iv) any Claims for compensatory, liquidated
         or punitive damages, damages for emotional distress, damages to
         reputation, back pay, front pay, attorneys' fees, expenses, and
         benefits. Beattie understands that, by signing this Agreement, he is
         waiving all Claims he ever had or now has against Bank and against all
         other Releasees that arose or may have arisen before he signs this
         Agreement, and that such waiver also waives any right to a remedy or
         recovery in an action that may be brought on his behalf by any
         government agency or other person based on any Claims released herein.
         Beattie further promises not to commence a lawsuit against Bank or
         against any other Releasee based on or asserting any Claims described
         in this paragraph.

         12. Bank and FCG hereby release and forever discharges Beattie, his
         heirs, administrators, successors and assigns (collectively referred to
         in this subparagraph as "Beattie"), and each of them, from any and all
         claims, debts, agreements, complaints or causes of action (hereinafter,
         collectively, "Claims"), whether known or unknown, whether suspected or
         unsuspected, that they ever had, now have, or may have against Beattie,
         for, upon, or by reason of any cause, matter, thing or event whatsoever
         occurring at any time up to and including the date and time it signs
         this Agreement. Bank and FCG understand that, by signing this
         Agreement, they are waiving all Claims they ever had or now have
         against Beattie that arose or may have arisen before they sign this
         Agreement. Bank and FCG further promise not to commence a lawsuit
         against Beattie based on or asserting any Claims described in this
         paragraph.

         13. Notwithstanding anything in this Agreement to the contrary, Bank
         and FCG shall remain obligated to defend and/or indemnify Beattie and
         hold him harmless from any claims made against him arising out of his
         activities as a director, officer or employee of Bank or FCG, to the
         same extent as Bank and FCG are or may be obligated to defend and/or
         indemnify and hold harmless any other director, officer or employee.



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         14. The following provisions of the Severance Agreement are
         incorporated herein by reference and made fully applicable to this
         Agreement:P.P. 9, 10, 11, 12, 13(a), (d), (e) and (g).

         15. All provisions of this Agreement are severable, and if any of them
         is determined to be invalid or unenforceable for any reason, the
         remaining provisions and portions of this Agreement shall be unaffected
         thereby and shall remain in full force to the fullest extent permitted
         by law.

         16. Beattie acknowledges that he has been advised of his right to
         consult with an attorney before signing this Agreement and represents
         that he in fact has done so. Beattie further acknowledges that he has
         been given a period of at least twenty-one (21) days to consider the
         Agreement before signing it. Beattie represents that he has read the
         Agreement and understands it, that he is signing this Agreement
         voluntarily and of his own free will, without any duress or coercion,
         and that he has had a reasonable time to consider the agreement before
         signing it.

         17. This Agreement will not become effective or enforceable until seven
         (7) days after Beattie signs it. Beattie may revoke this Agreement at
         any time within that seven (7) day period, by sending a written notice
         to Bank. If a written revocation is received within that seven (7) day
         period, this Agreement shall be null and void for all purposes.

         18. In view of the fact that each of the parties hereto has been
         represented by their own counsel and this Agreement has been fully
         negotiated by all parties, the legal principle that ambiguities in a
         document are construed against the draftsperson of that document shall
         not apply to this Agreement.

         19. Any claim or controversy arising out of or relating to this
         Agreement or any breach thereof shall be settled by arbitration. Any
         such arbitration shall take place in Philadelphia, Pennsylvania in
         accordance with the rules of the American Arbitration Association.
         Judgment upon the written award rendered by the arbitrator may be
         entered in the Court of Common Pleas having jurisdiction thereof. The
         written decision of an arbitrator shall be valid and binding, and final
         and non-appealable.

         20. All of the terms and provisions of this Agreement shall be binding
         upon and inure to the benefit of and be enforceable by the respective
         heirs, executors, administrators, legal representatives, successors and
         assigns of the parties hereto, except that the duties and
         responsibilities of Beattie as an employee, officer and director are of
         a personal nature and shall not be assignable or delegatable in whole
         or in part by Beattie.

         IN WITNESS WHEREOF, the parties hereto have entered into this Agreement
by signing it below.





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                              THIS AGREEMENT CONTAINS A RELEASE OF CLAIMS. READ
                              CAREFULLY BEFORE SIGNING.

                              NAZARETH NATIONAL BANK & TRUST CO.


                              By:_________________________________

                              Title:______________________________


                              FIRST COLONIAL GROUP


                              By:_________________________________

                              Title:______________________________



                              S. ERIC BEATTIE





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                                    EXHIBIT A

                                   RESIGNATION

         S. Eric Beattie hereby resigns as a member of the Board of Directors of
First Colonial Group, Inc., Nazareth National Bank and Trust Company and all of
their affiliated entities (including, but not limited to, any employee benefit
trusts sponsored by or related to First Colonial Group, Inc. or Nazareth
National Bank and Trust Company), effective __________________, 2001.



                                           -----------------------
                                           S. Eric Beattie





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                                    EXHIBIT B
                                  PRESS RELEASE

                  ERIC BEATTIE TO LEAVE NAZARETH NATIONAL BANK

Nazareth, Pa. 19, July 2001. In a joint announcement made today by S. Eric
Beattie, President and Chief Executive Officer, First Colonial Group, Inc. and
Nazareth National Bank, Mr. Beattie announced his plans to retire from his
position by the end of this year.

Mr. Beattie joined the Bank as a Trust Officer in 1977. He was promoted to
Senior Trust Officer in 1979, to Vice-President in 1981 and to Senior
Vice-President later that same year. He was elected to the Board of Directors in
1982. He was named President and Chief Operating Officer in 1984, adding the
title of Chief Executive Officer in 1987.

During this period, Mr. Beattie has guided First Colonial Group, Inc. and
Nazareth National Bank to considerable growth in key areas:

          o    Assets have grown from $73 million to almost $450 million
          o    Shareholders' equity has grown from $6.5 million to over $35
               million
          o    The Bank has grown from four branches to 17 branches.

In addition, the Bank services a $143,000,000 secondary-market mortgage
portfolio.

Mr. Beattie stated, "I'm pleased with what we've been able to achieve, which is
the result of superb teamwork from a first-class group of banking professionals.
We have actively sought, identified and captured a niche unique in the banking
industry where we do business, becoming the most regional of local banks and the
most local of regional banks. We've expressed this in our marketing as "Not just
in Nazareth, but not at all national". "I've been at the Bank for almost 25
years, and have been its president for 17 of those years. In spite of what we've
been able to achieve, it's time for some new blood at the helm. And it's time
for me to pursue a variety of other interests I have".

"I will leave the Bank at the end of the year knowing that our strategic
direction and the niche we occupy continue to provide a strong foundation for
future growth and profitability. During this time period, I will do my best to
achieve a smooth transition."

Mr. Beattie is well know in the area for his considerable contributions to many
organizations in the communities served by the Bank, including as Board member
of the Lehigh Valley Economic Development Corporation, Board member of the
Lehigh Valley Partnership, Chairman of the Moravian Hall Square Retirement
Community, Trustee of the Nazareth YMCA, Board member of the Northampton
Community College Foundation, Board member of the Northampton County Industrial
Development Commission, Past Chairman of the Distinguished Citizen Dinner for
Minsi Trials Council, Boy Scouts of America, Chairman of the Calvary Baptist
Church, and other activities.

The Board of Directors of Nazareth National Bank expressed their gratitude to
Mr. Beattie for his many years of service and contributions to the Bank and
wished him well in his new ventures.








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