EMPLOYMENT AGREEMENT
                              --------------------

     THIS AGREEMENT is entered into this 4th day of April, 1996, is an amendment
and restatement of the agreement entered into the 11th day of January,  1996, by
and between First Lancaster Bancshares,  Inc. (the "Company") and Tony A. Merida
(the  "Employee"),  effective on the closing date (the "Effective  Date") of the
conversion of First Lancaster Federal Savings Bank from mutual to stock form.

     WHEREAS,  the  Employee  has  heretofore  been  employed by the Bank as its
Executive Vice President and is experienced in all phases of the business of the
Bank; and

     WHEREAS,  the parties  desire by this writing to establish and to set forth
the employment relationship between the Company and the Employee.

     NOW, THEREFORE, it is AGREED as follows:

     1. Employment.  The Employee is employed as the Executive Vice President of
        ----------
the  Company.  The  Employee  shall render such  administrative  and  management
services  for the  Company  as are  currently  rendered  and as are  customarily
performed  by persons  situated in a similar  executive  capacity.  The Employee
shall  also  promote,  by  entertainment  or  otherwise,  as and  to the  extent
permitted by law, the business of the Company. The Employee's other duties shall
be such as the Board of Directors of the Company ("Board") may from time to time
reasonably direct, including normal duties as an officer of the Company.

     2.  Consideration  from Company:  Joint and Several  Liability.  In lieu of
         ----------------------------------------------------------
paying the Employee a base salary during the term of this Agreement, the Company
hereby  agrees  that to the extent  permitted  by law,  it shall be jointly  and
severally  liable  with the Bank for the  payment of all  amounts  due under the
employment  agreement of even date  herewith  between the Bank and the Employee.
Nevertheless,  the Board may in its  discretion  at any time  during the term of
this Agreement agree to pay the Employee a base salary for the remaining term of
this  Agreement.  If the  Board  agrees  to pay such  salary,  the  Board  shall
thereafter  review,  not less often than  annually,  the rate of the  Employee's
salary, and in its sole discretion may decide to increase his salary.

     3.  Discretionary  Bonuses.  The Employee shall participate in an equitable
         ----------------------
manner  with  all  other   senior   management   employees  of  the  Company  in
discretionary  bonuses  that  the  Board  may  award  from  time  to time to the
Company's senior management  employees.  No other  compensation  provided for in
this  Agreement  shall  be  deemed  a  substitute  for the  Employee's  right to
participate in such discretionary bonuses.

     4. (a)  Participation  in Retirement,  Medical and Other Plans.  During the
             ------------------------------------------------------
term of this  Agreement,  the Employee  shall be eligible to  participate in the
following benefit plans: group hospitalization, disability, health, dental, sick
leave, life insurance,  travel and/or accident  insurance,  auto  allowance/auto
lease,  retirement,  pension,  and/or other  present or future  qualified  plans
provided by the Company.

        (b) Employee Benefits;  Expenses.  The Employee shall participate in any
            ----------------------------
fringe  benefits  which are or may  become  available  to the  Company's  senior
management  employees,  including  for  example:  any stock  option or incentive
compensation  plans,  and any other  benefits  which are  commensurate  with the
responsibilities  and  functions  to be  performed  by the  Employee  under this
Agreement.  The Employee shall be reimbursed  for all  reasonable  out-of-pocket
business  expenses  which he shall incur in connection  with his services  under
this  Agreement  upon  substantiation  of such expenses in  accordance  with the
policies of the Company.

         5. Term.  The Company  hereby  employs the  Employee,  and the Employee
            ----
hereby accepts such employment under this Agreement,  for the period  commencing
on the Effective Date and ending  thirty-six  months thereafter (or such earlier
date as is  determined  in  accordance  with Section 9).  Additionally,  on each
annual  anniversary  date  from  the  Effective  Date,  the  Employee's  term of
employment  shall be extended for an additional  one-year period beyond the then
effective  expiration  date  provided  the Board  determines  in a duly  adopted
resolution that the performance of the Employee has met the Board's requirements
and standards,  and that this Agreement shall be extended. Only those members of
the  Board  of  Directors  who  have no  personal  interest  in this  Employment
Agreement  shall discuss and vote on the approval and subsequent  review of this
Agreement.
<PAGE>

     6. Loyalty; Noncompetition.
        -----------------------

          (a)  During  the  period of his  employment  hereunder  and except for
illnesses,  reasonable vacation periods,  and reasonable leaves of absence,  the
Employee shall devote all his full business time, attention,  skill, and efforts
to the faithful  performance of his duties hereunder;  provided,  however,  from
time to time, the Employee may serve on the boards of directors of, and hold any
other  offices or  positions  in,  companies  or  organizations,  which will not
present any conflict of interest with the Company or any of its  subsidiaries or
affiliates,  or unfavorably  affect the  performance  of the  Employee's  duties
pursuant  to this  Agreement,  or will not  violate  any  applicable  statute or
regulation.  "Full  business  time" is  hereby  defined  as that  amount of time
usually  devoted to like  companies by similarly  situated  executive  officers.
During the term of his employment  under this Agreement,  the Employee shall not
engage in any business or activity contrary to the business affairs or interests
of the Company, or be gainfully employed in any other position or job other than
as provided above.

          (b)  Nothing  contained in this Paragraph 6 shall be deemed to prevent
or limit the Employee's right to invest in the capital stock or other securities
of any business  dissimilar from that of the Company,  or solely as a passive or
minority investor in any business.

     7. Standards. The Employee shall perform his duties under this Agreement in
        ---------
accordance with such  reasonable  standards as the Board may establish from time
to time. The Company will provide Employee with the working facilities and staff
customary for similar executives and necessary for his to perform his duties.

     8. Vacation and Sick Leave. At such reasonable  times as the Board shall in
        -----------------------
its discretion permit,  the Employee shall be entitled,  without loss of pay, to
absent himself  voluntarily  from the  performance of his employment  under this
Agreement, all such voluntary absences to count as vacation time, provided that:

          (a) The Employee shall be entitled to an annual vacation in accordance
with the policies that the Board periodically  establishes for senior management
employees of the Company.

          (b) The Employee  shall not receive any additional  compensation  from
the Company on account of his failure to take a vacation or sick leave,  and the
Employee shall not accumulate  unused vacation from one fiscal year to the next,
except in either case to the extent authorized by the Board.

          (c) In addition to the aforesaid paid vacations, the Employee shall be
entitled without loss of pay, to absent himself voluntarily from the performance
of his employment with the Company for such  additional  periods of time and for
such valid and legitimate reasons as the Board may in its discretion  determine.
Further, the Board may grant to the Employee a leave or leaves of absence,  with
or without pay, at such time or times and upon such terms and conditions as such
Board in its discretion may determine.

          (d)  In  addition,  the  Employee  shall be entitled to an annual sick
leave benefit as established by the Board.

     9.  Termination  and  Termination  Pay.  Subject to Section 11 hereof,  the
         ----------------------------------
Employee's   employment   hereunder  may  be  terminated   under  the  following
circumstances:

          (a)  Death.  The  Employee's  employment  under this  Agreement  shall
               -----
terminate upon his death during the term of this  Agreement,  in which event the
Employee's estate shall be entitled to receive the compensation due the Employee
through the last day of the calendar month in which his death occurred.

          (b)   Disability.   (1)  The  Company  may  terminate  the  Employee's
                ----------
employment after having established the Employee's  Disability.  For purposes of
this Agreement,  "Disability" means a physical or mental infirmity which impairs
the Employee's ability to substantially  perform his duties under this Agreement
and which results in the Employee  becoming  eligible for  long-term  disability
benefits under the Company's  long-term  disability plan (or, if the Company has
no such plan in effect,  which impairs the Employee's  ability to  substantially
perform his duties under this Agreement for a period of one hundred eighty (180)
consecutive  days).  The  Employee  shall be  entitled to the  compensation  and
benefits provided for under this Agreement for (i) any period during the

<PAGE>
term  of  this  Agreement  and  prior  to the  establishment  of the  Employee's
Disability  during  which the  Employee is unable to work due to the physical or
mental  infirmity,  or (ii)  any  period  of  Disability  which  is prior to the
Employee's  termination  of employment  pursuant to this Section 9(b);  provided
that any benefits paid pursuant to the Company's long term  disability plan will
continue as provided in such plan.

                    (2)  During  any  period  that the  Employee  shall  receive
disability  benefits and to the extent that the Employee shall be physically and
mentally  able to do so,  he shall  furnish  such  information,  assistance  and
documents so as to assist in the continued  ongoing business of the Company and,
if able,  shall make himself  available  to the Company to undertake  reasonable
assignments  consistent  with his prior  position  and his  physical  and mental
health.  The Company shall,  upon  substantiation  by the Employee in accordance
with the policies of the Company,  pay all reasonable  expenses  incident to the
performance  of any  assignment  given to the  Employee  during  the  disability
period.

                    (c) Just  Cause.  The Board may,  by  written  notice to the
                        -----------
Employee,  immediately terminate his employment at any time, for Just Cause. The
Employee shall have no right to receive  compensation  or other benefits for any
period after termination for Just Cause. Termination for "Just Cause" shall mean
termination  because  of, in the good  faith  determination  of the  Board,  the
Employee's personal  dishonesty,  incompetence,  willful  misconduct,  breach of
fiduciary duty involving personal profit,  intentional failure to perform stated
duties,  willful  violation of any law, rule or  regulation  (other than traffic
violations or similar  offenses) or final  cease-and-desist  order,  or material
breach of any provision of this Agreement. Notwithstanding the foregoing, in the
event of  termination  for Just Cause there shall be delivered to the Employee a
copy of a  resolution  duly adopted by the  affirmative  vote of not less than a
majority of the entire  membership of the Board at a meeting of the Board called
and held for that  purpose  (after  reasonable  notice  to the  Employee  and an
opportunity for the Employee,  together with the Employee's counsel, to be heard
before the Board), such meeting and the opportunity to be heard to be held prior
to, or as soon as reasonably practicable following termination,  but in no event
later than 60 days  following such  termination,  finding that in the good faith
opinion of the Board the  Employee  was guilty of conduct set forth above in the
second sentence of this Subsection (c) and specifying the particulars thereof in
detail. If following such meeting the Employee is reinstated,  the Board may, in
its  discretion,  direct  payment to the  Employee  in an amount of pay that the
Employee  would have  received  if he had been  employed  by the Bank during the
period between his termination and reinstatement.

                    (d) Without  Just  Cause;  Constructive  Discharge.  (1) The
                        ----------------------------------------------
Board  may,  by  written  notice  to the  Employee,  immediately  terminate  his
employment  at any time for a reason  other than Just Cause,  in which event the
Employee  shall be entitled to receive the following  compensation  and benefits
(unless  such  termination  occurs  within the time  period set forth in Section
11(b)  hereof in which  event the  benefits  and  compensation  provided  for in
Section 11 shall apply):  (i) any salary provided  pursuant to Section 2 hereof,
up to the  date of  expiration  of the  term as  provided  in  Section  5 hereof
(including  any renewal term) of this Agreement (the  "Expiration  Date"),  plus
said  salary  for an  additional  12-month  period,  and (ii) at the  Employee's
election  either  (A) cash in an  amount  equal to the cost to the  Employee  of
obtaining all health,  life,  disability  and other  benefits which the Employee
would have been eligible to  participate  in through the  Expiration  Date based
upon the benefit levels  substantially  equal to those that the Company provided
for the  Employee at the date of  termination  of  employment  or (B)  continued
participation  under such Company benefit plans through the Expiration Date, but
only to the extent the Employee continues to qualify for participation  therein.
All  amounts  payable  to the  Employee  shall be  paid,  at the  option  of the
Employee,  either (I) in periodic  payments through the Expiration Date, or (II)
in one lump sum within ten (10) days of such termination.

                    (2) The Employee may  voluntarily  terminate his  employment
under this  Agreement,  and the Employee shall  thereupon be entitled to receive
the  compensation  and benefits  payable under Section  9(d)(1)  hereof,  within
ninety (90) days following the occurrence of any of the following events,  which
has not been  consented  to in advance by the  Employee in writing  (unless such
voluntary  termination  occurs within the time period set forth in Section 11(b)
hereof in which event the benefits and  compensation  provided for in Section 11
shall apply): (i) the requirement that the Employee move his personal residence,
or perform his principal executive  functions,  more than thirty (30) miles from
his  primary  office;   (ii)  a  material   reduction  in  the  Employee's  base
compensation,  as the same may be changed by mutual  agreement from time to time
other than in connection with an institution-wide  reduction;  (iii) the failure
by the  Company to  continue  to provide  the  Employee  with  compensation  and
benefits  provided for under this  Agreement,  as the same may be increased from
time to time, or with benefits  substantially  similar to those

<PAGE>
provided to him under any of the  employee  benefit  plans in which the Employee
now or  hereafter  becomes a  participant,  or the  taking of any  action by the
Company  which,  directly or  indirectly,  would  materially  reduce any of such
benefits or deprive the Employee of any material  fringe benefit enjoyed by him;
(iv) the  assignment to the Employee of duties and  responsibilities  materially
different  from those  normally  associated  with his position as  referenced at
Section  1; (v) a  failure  to elect or  reelect  the  Employee  to the Board of
Directors  of the  Company  if the  Employee  was  serving  on the  Board on the
Effective  Date or was  otherwise  elected to the Board  during the term of this
Agreement;   (vi)  a  material   diminution  or  reduction  in  the   Employee's
responsibilities  or  authority   (including   reporting   responsibilities)  in
connection with his employment with the Company;  or (vii) a material  reduction
in the secretarial or other administrative support of the Employee other than in
connection with an institution-wide reduction in force.

                    (3) In the event that Section  280G of the Internal  Revenue
Code of 1986, as amended (the "Code") becomes  applicable to payments made under
this Section 9(d),  and the payments  exceed the "Maximum  Amount" as defined in
Section  11(a)(1)  hereof,  the payments shall be reduced as provided by Section
11(a)(2) of this Agreement.

                    (e) Voluntary Termination by Employee. Subject to Section 11
                        ---------------------------------
hereof,  the  Employee may  voluntarily  terminate  employment  with the Company
during the term of this Agreement, upon at least 60 days prior written notice to
the Board of  Directors,  in which  case the  Employee  shall  receive  only his
compensation,  vested  rights  and  employee  benefits  up to  the  date  of his
termination.

     10. No  Mitigation.  The  Employee  shall not be required  to mitigate  the
         --------------
amount of any payment provided for in this Agreement by seeking other employment
or otherwise and no such payment shall be offset or reduced by the amount of any
compensation or benefits provided to the Employee in any subsequent employment.

     11. Change in Control.
         ----------------

                    (a)  Change  in  Control;   Involuntary   Termination.
                         ------------------------------------------------
(1)  Notwithstanding  any provision  herein to the contrary,  if the  Employee's
employment  under this  Agreement  is  terminated  by the  Company,  without the
Employee's  prior  written  consent and for a reason  other than Just Cause,  in
connection  with or within twelve (12) months after any change in control of the
Bank or the  Company,  the  Employee  shall,  subject to  Paragraph  (2) of this
Section 11(a), be paid an amount equal to the difference between (i) the product
of 2.99 times his "base amount" as defined in Section 280G(b)(3) of the Code and
regulations  promulgated  thereunder (the "Maximum Amount"), and (ii) the sum of
any other parachute  payments (as defined under Section  280G(b)(2) of the Code)
that the Employee  receives on account of the change in control.  Said sum shall
be paid in one lump sum within ten (10) days of such termination. This paragraph
would not apply to a  termination  of  employment  due to death,  Disability  or
voluntary termination by the Employee.

                    (2) In the event that the Employee  and the Company  jointly
determine and agree that the total parachute  payments  receivable under clauses
(i)  and  (ii)  of  Section   11(a)(1)   hereof   exceed  the  Maximum   Amount,
notwithstanding  the payment procedure set forth in Section 11(a)(1) hereof, the
Employee shall determine  which and how much, if any, of the parachute  payments
to which he is  entitled  shall  be  eliminated  or  reduced  so that the  total
parachute  payments  to be  received  by the  Employee do not exceed the Maximum
Amount. If the Employee does not make his determination within ten business days
after  receiving a written  request from the Company,  the Company may make such
determination,  and shall  notify the  Employee  promptly  thereof.  Within five
business  days  of  the  earlier  of the  Company's  receipt  of the  Employee's
determination pursuant to this paragraph or the Company's  determination in lieu
of a determination by the Employee, the Company shall pay to or distribute to or
for the benefit of the Employee such amounts as are then due the Employee  under
this Agreement.

                    (3) As a result of  uncertainty  in  application  of Section
280G of the Code at the time of  payment  hereunder,  it is  possible  that such
payments  will have been made by the  Company  which  should  not have been made
("Overpayment")  or that  additional  payments  will not have  been  made by the
Company which should have been made  ("Underpayment"),  in each case, consistent
with the calculations  required to be made under Section 11(a)(1) hereof. In the
event  that the  Employee,  based upon the  assertion  by the  Internal  Revenue
Service against the Employee of a deficiency  which the Employee  believes has a
high  probability of success,  determines that an Overpayment has been made, any
such  Overpayment  paid or  distributed  by the Company to or for the benefit of

<PAGE>
Employee  shall be  treated  for all  purposes  as a loan ab  initio  which  the
Employee  shall repay to the Company  together with  interest at the  applicable
federal  rate  provided  for in  Section  7872(f)(2)(B)  of the Code;  provided,
however, that no such loan shall be deemed to have been made and no amount shall
be payable by the  Employee to the Company if and to the extent such deemed loan
and payment  would not either reduce the amount on which the Employee is subject
to tax under Section 1 and Section 4999 of the Code or generate a refund of such
taxes.  In the event that the  Employee  and the Company  determine,  based upon
controlling precedent or other substantial  authority,  that an Underpayment has
occurred,  any such Underpayment shall be promptly paid by the Company to or for
the benefit of the Employee  together  with interest at the  applicable  federal
rate provided for in Section 7872(f)(2)(B) of the Code.

                    (4) The term  "change in control"  shall mean any one of the
following  events:  (1) the  acquisition of ownership,  holding or power to vote
more than 25% of the Bank's or the Company's  voting stock,  (2) the acquisition
of the  ability  to control  the  election  of a  majority  of the Bank's or the
Company's  directors,  (3) the  acquisition of a controlling  influence over the
management  or  policies  of the Bank or the Company by any person or by persons
acting as a "group"  (within  the  meaning  of Section  13(d) of the  Securities
Exchange Act of 1934), (4) the acquisition of control of the Bank or the Company
within the meaning of 12 C.F.R. Part 574 or its applicable equivalent (except in
the case of (1),  (2),  (3) and (4) hereof,  ownership or control of the Bank by
the Company  itself shall not  constitute a "change in control"),  or (5) during
any period of two  consecutive  years,  individuals who at the beginning of such
period (the  "Continuing  Directors")  constitute  the Board of Directors of the
Company or the Bank (the "Existing Board") cease for any reason to constitute at
least a  majority  thereof,  provided  that any  individual  whose  election  or
nomination for election as a member of the Existing Board was approved by a vote
of at least a  majority  of the  Continuing  Directors  then in office  shall be
considered a Continuing  Director.  For purposes of this subparagraph  only, the
term  "person"  refers to an individual or a  corporation,  partnership,  trust,
association, joint venture, pool, syndicate, sole proprietorship, unincorporated
organization or any other form of entity not specifically listed herein.

                    (b)    Change    in    Control;    Voluntary    Termination.
                           -----------------------------------------------------
Notwithstanding  any other  provision  of this  Agreement to the  contrary,  but
subject to Sections  11(a)(2),  11(a)(3),  and 11(c)  hereof,  the  Employee may
voluntarily  terminate his employment  under this  Agreement  within thirty (30)
days  following  a change in control of the Bank or the  Company,  as defined in
Section  11(a)(4)  hereof,  and be entitled to receive the payment  described in
Section 11(a)(1) of this Agreement.  Alternatively, the Employee may voluntarily
terminate  his  employment  under  this  Agreement  within  twelve  (12)  months
following  such change in control of the Bank or the  Company  and the  Employee
shall thereupon be entitled to receive the payment described in Section 11(a)(1)
of this Agreement upon the occurrence of any of the following  events, or within
90 days  thereafter,  which has not been consented to in advance by the Employee
in  writing:  (i) the  requirement  that  the  Employee  perform  his  principal
executive  functions  more than thirty (30) miles from his primary  office as of
the date of the change in control;  (ii) a material  reduction in the Employee's
base  compensation  as in effect on the date of the  change in control or as the
same  may be  changed  by  mutual  agreement  from  time to time  other  than in
connection with an institution-wide reduction in force; (iii) the failure by the
Company to continue to provide  the  Employee  with  compensation  and  benefits
provided for under this  Agreement,  as the same may be  increased  from time to
time, or with benefits  substantially similar to those provided to him under any
employee  benefit in which the Employee is a  participant,  or the taking of any
action by the Company which, directly or indirectly, would materially reduce any
of such benefits or deprive the Employee of any material  fringe benefit enjoyed
by him at the time of the change in control; (iv) the assignment to the Employee
of  duties  and  responsibilities   materially  different  from  those  normally
associated  with his position as referenced at Section 1; (v) a failure to elect
or  reelect  the  Employee  to the Board of  Directors  of the  Company,  if the
Employee  is serving on the Board on the date of the change in  control;  (vi) a
material diminution or reduction in the Employee's responsibilities or authority
(including  reporting  responsibilities)  in connection with his employment with
the Company if the  Employee was serving on the Board on the  Effective  Date or
was otherwise elected to the Board during the term of this Agreement; or (vii) a
material  reduction in the  secretarial or other  administrative  support of the
Employee other than in connection with an institution-wide reduction in force.

                    (c) Any  payments  made  to the  Employee  pursuant  to this
Agreement,  or otherwise,  are subject to and conditioned  upon their compliance
with 12 U.S.C. Section 1828(k) and any regulations promulgated thereunder.
<PAGE>

                    (d) In  the  event  that  any  dispute  arises  between  the
Employee and the Company as to the terms or  interpretation  of this  Agreement,
including  this Section 11,  whether  instituted by formal legal  proceedings or
otherwise,  including any action that the Employee takes to enforce the terms of
this  Section 11 or to defend  against  any  action  taken by the  Company,  the
Employee  shall be reimbursed for all costs and expenses,  including  reasonable
attorneys'  fees,  arising from such dispute,  proceedings or actions,  provided
that the  Employee  shall  obtain  a final  judgement  by a court  of  competent
jurisdiction in favor of the Employee.  Such reimbursement  shall be paid within
ten (10) days of Employee's  furnishing to the Company written  evidence,  which
may be in the form, among other things, of a cancelled check or receipt,  of any
costs or expenses incurred by the Employee.

     12.  Federal Income Tax  Withholding.  The Company may withhold all Federal
          -------------------------------
and State income or other taxes from any benefit payable under this Agreement as
shall be required pursuant to any law or government regulation or ruling.

     13. Successors and Assigns.
         ----------------------

                    (a) Company.  This  Agreement  shall inure to the benefit of
                        -------
and be binding upon any corporate or other  successor of the Company which shall
acquire,  directly  or  indirectly,  by  merger,   consolidation,   purchase  or
otherwise, all or substantially all of the assets or stock of the Company.

                    (b)  Employee.  Since the  Company  is  contracting  for the
                         --------
unique and personal skills of the Employee, the Employee shall be precluded from
assigning or delegating his rights or duties  hereunder  without first obtaining
the written  consent of the  Company;  provided,  however,  that nothing in this
paragraph  shall  preclude (i) the Employee from  designating  a beneficiary  to
receive any benefit  payable  hereunder  upon his death,  or (ii) the executors,
administrators,  or other legal  representatives  of the  Employee or his estate
from assigning any rights hereunder to the person or persons entitled thereunto.

                    (c)  Attachment.  Except  as  required  by law,  no right to
                         ----------
receive  payments  under  this  Agreement  shall  be  subject  to  anticipation,
commutation,  alienation,  sale,  assignment,  encumbrance,  charge,  pledge, or
hypothecation or to exclusion, attachment, levy or similar process or assignment
by operation of law, and any attempt,  voluntary or  involuntary,  to effect any
such action shall be null, void and of no effect.

     14.  Amendments.  No  amendments  or additions to this  Agreement  shall be
          ----------
binding  unless  made in  writing  and signed by all of the  parties,  except as
herein otherwise specifically provided.

     15. Applicable Law. Except to the extent preempted by Federal law, the laws
         --------------
of the  Commonwealth  of Kentucky  shall govern this  Agreement in all respects,
whether as to its validity, construction, capacity, performance or otherwise.

     16.  Severability.  The  provisions  of  this  Agreement  shall  be  deemed
          ------------
severable and the  invalidity  or  unenforceability  of any provision  shall not
affect the validity or enforceability of the other provisions hereof.

     17. Entire  Agreement.  This Agreement,  together with any understanding or
         -----------------
modifications  thereof as agreed to in writing by the parties,  shall constitute
the entire agreement between the parties hereto.
<PAGE>


     IN WITNESS WHEREOF, the parties have executed this Agreement on the day and
year first hereinabove written.


ATTEST:                               FIRST LANCASTER BANCSHARES, INC.

/s/ Kathy G. Johnica                  By: /s/ Virginia R.S. Stump
--------------------------                -------------------------------
Secretary                                 Chairman of the Board


WITNESS:

/s/ Karen S. Hatfield                     /s/ Tony A. Merida
--------------------------                -------------------------------
                                          Tony A. Merida